In short
- A cascade of short-selling sent Bitcoin down 3.5% to $107,500 on Thursday, triggering more than $1 billion in bearish bets.
- The selloff caused $724 million in liquidations, with longs accounting for 74% of the total selloff.
- A market rift occurred as spot buyers on Coinbase piled in while short derivatives positions attacked.
Bitcoin suffered a sharp pullback on Thursday, driven mainly by short selling, which exacerbated losses.
In the 90 minutes leading up to the drop, Bitcoin fell 1.5% from $115,000, while open interest – which represents the total number of unsettled derivatives contracts – rose 2.3%, which he said added more than $591 million in notional value. Velo facts.
The cumulative volume delta of perpetual futures on offshore exchanges, such as Binance and Bybit, declined, while spot CVD remained stable, indicating that perpetual short sellers have driven Bitcoin’s decline.
Over the next two hours, short selling increased, leading to a 3.5% drop to $107,500 as spot sellers joined the fray. Open interest rose 4% and added another $1.03 billion in exposure.
“Short traders currently dominate the perpetual futures markets, and spot demand is still shrinking based on on-chain data,” Julio Moreno, head of research at CryptoQuant, told me. Declutter.
Amid the derivatives-induced chaos, a key difference emerged as spot CVD on US exchange Coinbase remained “largely positive,” indicating consistent buy-the-dip activity from spot investors.
The spot bid-ask delta indicator showed increased bidding activity, confirming that spot buyers absorbed the selling pressure from leveraged shorts. MintGlass facts.
The violent price movement led to a liquidation of $724 million within 24 hours. Long positions bore the brunt, accounting for $536 million of the total, indicating bulls were rallying on hopes of a recovery.
“The decline is due to a mix of macroeconomic uncertainty, rising geopolitical tensions and a spike in liquidations from overleveraged positions,” Ryan Lee, chief analyst at universal exchange Bitget, told reporters. Declutter.
The recovery after the Black Friday event was met with “profit taking, which further increased selling pressure,” Lee noted.
Looking ahead, the crypto market will likely “need time to rebalance or find its footing after such a major flushout,” Aragon CEO Anthony Leutenegger told me. Declutter. “As long as macro uncertainty persists… we should expect continued volatility.”
Moreno remains bearish despite spot investors’ dip-buying efforts and believes the “odds for a rally are skewed to the downside.”
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