Bitcoin’s sub-$100k fall triggered $1.4b in liquidations

Crypto markets were under downward pressure on Friday, December 20, due to Bitcoin falling below $100,000, the broad decline in spot price and the inflow of funds.

Cryptocurrency market prices corrected shortly after the US Federal Reserve announced it would slow interest rate cuts to address inflation concerns. Following the 25 basis point rate cut, Bitcoin (BTC) fell below $97,000, dragging the broader digital asset market along with it, according to Crypto.news price data pages.

Bitcoin’s decline triggered a $1.4 billion mass liquidation event, wiping out leveraged long positions within 24 hours, according to CoinGlass. The largest single trade liquidated was a $15.8 million Ethereum (ETH) position on Binance. The identity of the trader and his initial investment are unknown.

This flash reset open interest and funding rates on leading trading platforms such as CME, Binance, and Bybit.

Major altcoins like Solana (SOL) and Dogecoin (DOGE) were hit hard by the selling pressure, retracing gains from the “Trump won” rally and posting double-digit losses on the weekly timeframe.

Top 10 crypto liquidations by assets – December 20 | Source: CoinGlass

Despite widespread criticism of the Fed, experts suggested that a decline in the market was inevitable following the price increase after the US elections. Calls have emerged for Bitcoin to consolidate between $85,000 and $95,000 as a healthier support range.

QCP Capital noted on Telegram that the extreme bullish trend in the market ultimately triggered the correction. The total crypto market, which approached 4 trillion dollars for the first time, fell by 7.6% last day to approximately 3.4 trillion dollars at the time of writing.

While it is easy to blame the selloff on the Fed’s hawkish interest rate cut, we believe the main reason for the morning’s collapse is the market’s overly bullish position. Since the election, risk assets have followed an impressive one-sided course, leaving the market extremely vulnerable to any shocks.

QCP Capital