Bitcoin’s Dramatic Drop Below $95,000 Causes Huge Losses
When Bitcoin’s price fell below $95,000, the cryptocurrency market was rocked, and liquidations totalled around $300 million. Over the past week, Bitcoin’s value has dropped by 10%, leaving traders facing significant losses. Long traders took the brunt of the $294.66 million liquidated, losing $194 million of the total, while short sellers lost $99 million.
Liquidations Wave Affects International Traders
Leveraged positions were completely destroyed by the steep decline in Bitcoin’s price on December 23, which affected 105,495 traders worldwide. In a single deal, a single Binance user lost an incredible $4.76 million. Significant liquidation volumes were also recorded by major platforms including Bybit, OKX, and HTX, highlighting the market crash’s far-reaching effects.
Causes of the Market Crash
One of the main causes of the decline, according to analysts, was the Federal Reserve’s stricter monetary policies. Investor sentiment was disturbed when the Fed decided to trim the number of expected rate cuts for 2025 from four to two, indicating a more aggressive approach. Market confidence was also weakened by Federal Reserve Chairman Jerome Powell’s denial of a suggested government Bitcoin reserve strategy and his reiterated assertion that the Fed is not permitted by law to possess Bitcoin.
Ethereum and Other Cryptocurrencies Experience Problems
There were other cryptocurrencies that suffered besides Bitcoin. Ethereum traders lost $60 million, which made the market’s problems worse. Long trades were responsible for $43 million of the $64 million in liquidations that occurred from Bitcoin alone. These numbers demonstrate the enormous financial cost that traders and investors alike bear as a result of the market’s volatility.
Professional Views and Techniques for Risk Management
The $95,000 price of Bitcoin, according to Markus Thielen, head of research at 10x Research, is a significant risk management level. He underlined that this cutoff point, which is described in a paper titled “Is Bitcoin Entering the Death Zone?” published on December 9, is crucial in light of the Federal Reserve’s hawkish stance and the US Treasury Secretary’s expected actions in 2025. Thielen pointed out that other market elements, like worries over liquidity, are making things more difficult for investors.
A Word of Caution to Traders
The latest liquidations are a clear reminder of the inherent volatility and hazards connected with digital assets, especially as the cryptocurrency market continues to encounter challenges. To negotiate the unpredictable terrain, traders are advised to use care and strong risk management techniques.
