Bitcoin prices plummeted to $92,980 during late trading on December 5. This rapid decline occurred after the cryptocurrency achieved an all-time high earlier that same day, nearing $104,000 on Coinbase.
The sudden 10% drop erased approximately $10,000 from BTC’s value as yet another leverage-driven liquidation event transpired.
BREAKING: #Bitcoin briefly plunges -$8,000 in just 90 minutes, reaching a daily low of $92,000.
Bitcoin has since bounced back by +$5,000 from its low, though it remains subject to volatility. pic.twitter.com/7hqeSQl1LW
— The Kobeissi Letter (@KobeissiLetter) December 5, 2024
BTC Flash Crash
The drop back into five figures coincided with major media outlets worldwide celebrating Bitcoin’s milestone achievement above $100,000 for the first time.
“One noteworthy analysis of this event is that the ETFs didn’t respond at all,” remarked analyst ‘lowstrife’, who added:
“This was solely a move in spot bitcoin driven by, you guessed it, leverage.”
“If this is what a few traders in Asia can accomplish, imagine the impact if (when?) Saylor needs to liquidate his holdings to meet loan obligations. That would be significantly larger than this,” he stated.
Bitcoin pioneer Adam Back noted that there was “clearly too little market making” and continued, “Even a brief 4% gap between IBIT and spot BTC, really?!”
An interesting post-mortem about this move is that the ETF’s didn’t follow it at all. This was entirely a spot bitcoin move driven by, you guessed it, leverage. pic.twitter.com/nSIFpXMsbW
— lowstrife (@lowstrife) December 5, 2024
As reported by Coinglass, 163,587 traders faced liquidation in the past 24 hours, with the total liquidated value exceeding $900 million, of which 80% were long positions.
“Towards the end of the week, a sudden downward movement wiped out a wave of leverage, while other cryptocurrencies didn’t follow, and the long side of the overall crypto market remains robust,” stated crypto derivatives provider Greeks Live.
The crash and its subsequent correction have brought the asset back into its established range, where it has been trading since mid-November.
As of this writing, during early trading hours in Asia on Friday morning, BTC was exchanging at approximately $97,600.
Bitcoin ETFs Remain Optimistic
As previously mentioned, spot Bitcoin ETFs remained unaffected while the spot markets were purged of excess leverage.
The 11 spot Bitcoin ETFs in the United States experienced strong momentum, garnering a combined inflow of $748 million on Thursday. The BlackRock IBIT fund led with an inflow of $751.6 million, while Grayscale’s GBTC saw an outflow of $149 million, according to Coinglass.
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