Bitcoin Liquidations Surge to Three-Year High as Smaller Traders Drive Market Downturn

Bitcoin’s recent price drop has sparked a record surge in liquidations, with the total crypto market losing up to 11% on December 9.

Research from Ltrd revealed that smaller traders, rather than large investors, drove this crash. Bitcoin dipped to $94,000, fulfilling predictions made earlier in the week and filling a market gap created on December 5.

Coinbase was identified as a key player, with aggressive selling beginning nearly an hour before the price collapse. This selling pressure triggered a liquidation cascade, forcing overleveraged positions to close.

The total value of crypto liquidations reached $1.57 billion, with Bitcoin longs suffering $171.27 million in losses, while Ethereum longs saw $235.04 million in liquidations. Ltrd pointed out that this marked the largest liquidation event since 2021, signaling a massive shift in market dynamics.

Despite the carnage, some traders view the wipeout of excessive leverage as a positive step toward market stability. The forced liquidations are seen as a necessary correction, helping to reset the market and stabilize altcoins, with several flipping key resistance levels into support.

Ltrd also noted unusual behavior in the altcoin market, with assets like XRP dropping by over 5%, sparking speculation about potential market manipulation or other factors behind the sudden volatility. The overall market’s reaction reflects both a reset and lingering uncertainty about underlying forces at play.