The cryptocurrency market started the new week with harsh selling pressure.
Ethereum (ETH) fell below the $2,800 level to trade at $2,743, losing 9.90% in the last 24 hours, according to Binance data.
The situation was similarly negative for Bitcoin (BTC). BTC fell below the $84,000 threshold to $84,113, marking an 8.03% daily pullback. This sharp decline in both assets triggered chain liquidations in leveraged markets, further increasing volatility.
Total liquidations in the last 24 hours reached $934.64 million, one of the highest levels in recent memory. Of these liquidations, $858.45 million were long positions and $76.18 million were short positions.
The picture was quite striking even in short timeframes: The total value of positions liquidated in the last hour reached $145.79 million, reaching $326.24 million in the four-hour period and $399.27 million in the 12-hour period. Bitcoin led the way in liquidations with $375.47 million. $223.11 million in Ethereum, $46.36 million in Solana, and $25.69 million in Zcash were closed.
XRP fell to $2.01, falling 8.04% in the last 24 hours. Binance Coin (BNB) also failed to escape the selling pressure, falling to $813, recording an 8.94% drop. A 9.23% drop in Solana’s value pushed the asset’s price to $125, while Dogecoin fell over 10% to $0.1342. Cardano (ADA) similarly fell 10.72% to $0.3774.
Historically, Bitcoin tends to rise by an average of 9.7% in December, marking its third-strongest monthly performance of the year. The strongest month was October, with an average increase of 16.6%, while the weakest was September, with a 3.5% decline. However, experts say this year is different; due to Bitcoin’s tight correlation with stocks, shifts in risk appetite, rather than traditional seasonality, have become the driving force behind its price behavior.
Kathleen Brooks, research director at XTB, argued that Bitcoin is currently acting as a leading indicator of overall risk appetite, adding that the crypto market decline could have caused stocks to look weak at the start of the month. Brooks noted that the sharp decline in volatility is also making investors nervous, and that the VIX index’s drop below its 12-month average is fueling a sense of uncertainty heading into the end of the year. The outlook for CME Bitcoin futures is also weakening, with the premium on three-month Bitcoin contracts having fallen to its lowest level in at least a year. This suggests that investors’ appetite for long-term price appreciation is diminishing.
Jefferies strategist Mohit Kumar, on the other hand, states that negative developments for a number of cryptocurrencies have played a role in increasing the pressure on Bitcoin.
Last week, S&P Global downgraded Tether’s stock price, citing a rising proportion of high-risk assets in its reserves and “persistent gaps” in transparency. While Tether strongly rejected this decision, it added further pressure to the market. Meanwhile, Phong Le, CEO of Strategy, the world’s largest institutional Bitcoin holder, said the company could consider selling Bitcoin if its mNAV metric falls below 1. Currently, the mNAV stands at 1.19, but Strategy shares have lost 60% of their value over the past year, while Bitcoin has fallen only 13% during the same period.
This sharp decline also increases the risk of Strategy being removed from some indices. MSCI will complete its assessment this month regarding the removal of companies holding more than 50% of their total assets in digital assets from benchmark indices. Such a move could put additional pressure on both the company’s stock and its mNAV balance.
*This is not investment advice.