Crypto Market Plummets: Futures Liquidations Hit Record Levels
The cryptocurrency market experienced a significant fluctuation in the last 24 hours as Bitcoin dropped over 6% to around $94,725. This sudden decline particularly impacted the altcoin market deeply. The total cryptocurrency market capitalization, excluding Bitcoin, lost more than 15%, resulting in a loss of $258 billion. Meanwhile, the total market capitalization of the crypto market decreased by over 7%, falling to approximately $3.58 trillion.
Key reasons for the wave of selling in the crypto market include ongoing speculation that could lead to panic selling. One notable factor is Google's announcement regarding the launch of a next-generation quantum chip known as Willow. This chip can perform calculations that would take the fastest supercomputers today 10 septillion years in under five minutes. This significant technological development is believed to have raised concerns in the crypto market regarding its potential impact on Bitcoin. Experts suggest that Bitcoin could adapt by adjusting its difficulty level against quantum computer attacks and implementing security improvements.
In terms of Bitcoin investment pullbacks, the Chinese Royal Government transferred 406 Bitcoins to QCP Capital on Monday, marking a $40 million sale. The government of Bhutan is highlighted as a major investor holding over 11,000 Bitcoins. Additionally, there are reports that El Salvador may consider easing its Bitcoin adoption policies to reach a $1.3 billion loan agreement with the IMF.
The cryptocurrency market faced selling pressure amid increasing liquidations in the leveraged space. According to recent data, over 582,000 traders were liquidated, with total liquidations reaching $1.7 billion. Over $1.5 billion of this amount stemmed from long positions, creating a scenario where traders trying to capitalize on the downward trend found themselves in difficulty.
On a positive note, institutional demand for Bitcoin remains robust. The total Bitcoin supply on centralized exchanges has decreased by over 10,000, dropping to around 2.25 million. BlackRock continues to lead among U.S. spot Bitcoin ETFs in BTC accumulation, seen as a potential precursor to a significant comeback.
The crypto market has also recorded unprecedented levels of liquidation, facing an unexpected shift that resulted in nearly $260 billion drop in market cap. During this period, the 24-hour trading volume surged remarkably from $150 billion to $350 billion, indicating increased liquidations of long positions as a result of panic selling. Data from Coinglass show that markets witnessed one of the highest liquidation events in recent history.
However, it was not Bitcoin but other altcoins like Ethereum, Solana, and Dogecoin that experienced the highest liquidations. The largest liquidation on Binance involved 19.6 million worth of ETH, while total liquidations reached $250 million.
Is the correction in the crypto market temporary? While the cryptocurrency market has experienced a decline, many experts see it as a healthy correction within an ongoing bull cycle. Although Bitcoin has lost over 3% of its value and is currently trading around $96,000, the price drops have not altered long-term growth expectations. Altcoins like XRP, ADA, DOGE, and TRON have faced double-digit losses, with predictions of further declines.
Some market analysts believe that corrections of 30% in total market capitalization, as indicated by historical data, create opportunities to strengthen bull runs. Recent developments regarding the U.S. government's potential approach to Bitcoin and discussions about new crypto tax policies further enhance optimism for 2025. Current market models, combined with net flows from spot BTC ETFs and institutional accumulations, support the likelihood of a continued long-term bull trend despite the current volatility.