The virtual currency market entered the new year with severe selling pressure.
According to Binance data, Ethereum (ETH) fell below the $2,800 level and traded at $2,743, down 9.90% in the past 24 hours.
The situation was similarly negative for Bitcoin (BTC). BTC fell below the $84,000 threshold to $84,113, marking a daily decline of 8.03%. The sharp decline in both assets triggered a chain of liquidations in leveraged markets, further increasing volatility.
Chart showing the decline in BTC price.
Total liquidations in the past 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.
This situation was very impressive even in a short time frame. The total amount of positions liquidated in the past hour reached $145.79 million, with $326.24 million in 4 hours and $399.27 million in 12 hours. Bitcoin topped the list in liquidations with $375.47 million. $223.11 million was closed on Ethereum, $46.36 million on Solana, and $25.69 million on Zcash.
XRP fell to $2.01, down 8.04% in the past 24 hours. Binance Coin (BNB) also did not escape from the selling pressure, dropping to $813, a decline of 8.94%. The asset price rose to $125 as Solana’s value fell by 9.23%, while Dogecoin fell more than 10% to $0.1342. Cardano (ADA) similarly fell by 10.72% to $0.3774.
Historically, Bitcoin has tended to rise by an average of 9.7% in December, marking its third-best monthly performance this year. The best month was October with an average increase of 16.6%, while the slowest was September with a 3.5% decline. But experts say this year will be different. Because Bitcoin is highly correlated with stocks, changes in risk appetite, rather than traditional seasonality, are driving its price action.
Kathleen Brooks, research director at XTB, argued that Bitcoin is currently acting as a leading indicator of overall risk appetite, adding that the decline in the crypto market may have caused stock prices to look weak at the start of the month. Brooks noted that the sharp drop in volatility is also worrying investors, with the VIX index below its trailing 12-month average, adding to uncertainty heading into the year-end. The outlook for CME Bitcoin futures has also worsened, with premiums for three-month Bitcoin contracts falling to their lowest levels in at least a year. This suggests that investors’ appetite for long-term price increases is diminishing.
Meanwhile, Jefferies strategist Mohit Kumar said negative developments for many cryptocurrencies are contributing to increased pressure on Bitcoin.
Last week, S&P Global downgraded Tether’s stock price, citing an increasing proportion of high-risk assets in its reserves and “remaining gaps” in transparency. Tether strongly rejected this decision, which put further pressure on the market. Meanwhile, Von Leh, CEO of Strategy, the world’s largest institutional Bitcoin holder, said the company may consider selling Bitcoin if the mNAV index falls below 1. Currently with an mNAV of 1.19, Strategy stock has lost 60% of its value over the past year, while Bitcoin has only lost 13% over the same period.
This sharp decline also increases the risk that the strategy will be removed from some indexes. This month, MSCI is expected to complete an assessment on excluding companies from benchmark indexes that hold more than 50% of their total assets in digital assets. Such a move could put further pressure on both the company’s stock price and mNAV balance.
*This is not investment advice.
