BTC spiked in the early morning, with 24-hour liquidations far exceeding "312." How to judge the market trend going forward?

Original Title: "Bitcoin Plummets to $94,000, $1.716 Billion Liquidated Across the Network: In-Depth Analysis of Ethereum and Altcoin Markets"

Original Author: Alvis, MarsBit

Early this morning, the price of Bitcoin briefly plunged to $94,000, triggering severe fluctuations in the cryptocurrency market, with altcoins suffering even more, as most tokens fell by 20%-30%. By the time of publication, Bitcoin had rebounded somewhat. This market turmoil resulted in a total liquidation amount of $1.716 billion across the network, involving 570,876 traders. This event not only marks the largest liquidation wave in nearly two years but also reflects the current structural risks and emotional volatility in the crypto market.

This article will deeply analyze the background, data, market impact, and future trends of this event.

Market Liquidation Scale Hits One-Year High: Leverage Trading Becomes Risk Hotspot

This liquidation event, with a total liquidation amount of $1.716 billion, has set a record since 2023, surpassing last month's single-day liquidation scale of about $500 million. Among them, long positions suffered particularly heavy losses, amounting to $1.53 billion, while short positions lost $155 million. Data shows that small altcoins have become the "disaster area" of this liquidation, with a liquidation amount reaching $564 million, of which over 96% were long positions.

Disaster Area of Liquidation: The Logic Behind the Platform Data

Binance led the liquidation this time, with a total liquidation amount of $740 million, accounting for 42% of the total network liquidation.

OKX and Bybit ranked second and third, with liquidation amounts of $422 million and $369 million, respectively. The largest single liquidation transaction occurred in Binance's ETH/USDT contract, amounting to $19.69 million.

Bitcoin and Ethereum, as the two core assets of the crypto market, were not spared.

Bitcoin briefly fell below the psychological threshold of $100,000, dropping over $6,000 in one day, resulting in $182 million in liquidations, with long losses accounting for 77%.

Ethereum, after failing to break through the key resistance level of $4,050, retested the support at $3,500, recording $243 million in liquidations, of which long positions lost $219 million.

Historical Perspective: Why Is This Liquidation Scale So Huge?

Large-scale liquidation events in the crypto market are not uncommon, but the scale of this liquidation wave is clearly exceptional.

From a trend perspective, since 2022, as the market size has expanded and leverage has increased, the total liquidation amount has continued to rise. More importantly, the concentrated risk exposure of leveraged traders makes the market more vulnerable when facing extreme volatility.

It is noteworthy that the market has experienced several peaks of liquidation in the past year, but the scale has mostly hovered between $500 million and $1 billion. However, this amount has surpassed the previous high of liquidation in the crypto market since the 519 incident in 2021, potentially setting a record for this bull market, and far exceeding the 312 incident in 2020.

The reasons for this liquidation wave mainly include: the chain reaction of high-leverage positions, the liquidation chain triggered by extreme market fluctuations, and the dominant structure of long positions. Especially, the spike in Bitcoin's price triggered leveraged liquidations, coupled with the high volatility of the altcoin market, resulted in long liquidations accounting for over 90%. Compared to the external shocks of the 312 incident, this time it is more a result of internal leverage imbalance.

This serves as a reminder to investors: in a high-volatility market, rationally controlling leverage is key to long-term participation.

Ethereum: From On-Chain Activity to Resilience in the Derivatives Market

On-Chain Data and Network Activity

DApp transaction volume ranking in the past 7 days

As the second-largest asset in the market, Ethereum has shown a certain degree of resilience during this liquidation wave. On-chain data shows that Ethereum network transaction volume surged by 24% in the past week, reaching $24.2 billion. Including second-layer solutions like Base, Arbitrum, and Polygon, the total transaction volume skyrocketed to $48.6 billion. This data far exceeds Solana's $29.5 billion, indicating that Ethereum's network activity remains high.

Additionally, since November 29, the inflow of ETH ETF funds has reached a historical high of $1.17 billion, injecting liquidity into the market. Nevertheless, the ETH price still failed to break through the long-term resistance level of $4,050, and the pressure from this technical threshold clearly restricts price movements.

Derivatives Market Signals: Optimism Not Fully Dispersed

From the futures and options market perspective, the derivatives market for ETH still maintains strong resilience.

The annualized premium for Ethereum futures remains at 17%, well above the neutral level of 10%, indicating sustained demand for ETH leverage.

At the same time, the skew of Ethereum options has shifted from -7% to -2%, showing that market sentiment has transitioned from extreme optimism to neutrality, but no significant bearish signals have emerged.

Moreover, the perpetual contract financing rate is currently at 2.7%, above the neutral threshold of 2.1%, indicating that demand for short-term leverage remains strong. However, the financing rate has gradually decreased from a peak of 5.4% on December 5, which may also reflect an increased caution among some traders regarding market volatility.

Macro and Micro: Dual Factors Affecting Market Sentiment

The volatility of the crypto market often accompanies changes in macroeconomic variables. This recent plunge is no exception, as the macroeconomic environment has significantly impacted investor confidence.

Recently, China's November inflation data fell by 0.6% month-on-month, reflecting the risks of weak global economic growth. Additionally, Nvidia's stock price decline due to monopoly investigations has intensified downward pressure on the tech sector, indirectly affecting investors' preferences for risk assets.

At the same time, the volatility and structural risks inherent in the cryptocurrency market have exacerbated panic sentiment. Although the activity of on-chain data and ETF fund inflows provided some support for the market, they did not fully offset the negative impact of the external environment.

Future Outlook: Can Altcoins Find a Breathing Space?

Technical Aspects and Key Support Levels

Bitcoin needs to stabilize above the key psychological threshold of $100,000 to stabilize market sentiment; Ethereum needs to challenge the resistance level of $4,050 again to restore investor confidence. Regarding altcoins, despite the current high liquidation ratio, there may be rebound opportunities after the market undergoes a deep correction, especially for projects with strong fundamentals and community support.

Structural Opportunities and Risks

The actions of institutional investors during this liquidation event are worth noting. The inflow of ETF funds and the improvement in on-chain data may provide a foundation for future market recovery, but the high-leverage operations of retail traders remain a major source of market vulnerability. In the short term, as market fluctuations gradually calm down, professional investors may reposition their holdings to lay the groundwork for the next market trend.

Conclusion: Market Review and Warnings After the Liquidation Storm

This liquidation event once again highlights the high volatility and high-risk characteristics of the cryptocurrency market. The spike in Bitcoin and Ethereum prices not only brought short-term panic but also reminds investors to manage leverage positions cautiously to avoid falling into uncontrollable risks due to market fluctuations.

According to CoinGlass data, the probability of Bitcoin rising in December and January over the past 12 years has been around 50%. This historical data indicates that the overall performance of the crypto market at the end of the year and the beginning of the year tends to be relatively flat, with increased volatility but unclear trends. In the future, investors need to pay more attention to market data, macro environments, and the dynamic changes in leverage positions, ensuring effective risk management to support long-term investment strategies.