Bitcoin Drops Amid Rising Short Sellers and Spot Buyer Activity
A sharp decline in Bitcoin prices occurred on Thursday, falling 3.5% to $107,500. This drop resulted from a significant increase in short-selling activity, which added over $1 billion in bearish positions.
Market Dynamics and Liquidations
The sell-off led to liquidations totaling $724 million within 24 hours, with long positions making up 74% of these liquidations. In the 90 minutes preceding the drop, Bitcoin’s value fell by 1.5% from $115,000. During this period, open interest, indicating unsettled derivative contracts, rose by 2.3%, which added over $591 million in notional value.
Spot Buyers vs. Short Sellers
Despite the downturn, spot buyers showed resilience on Coinbase, accumulating while aggressive short-sellers targeted derivatives. The spot cumulative volume delta (CVD) remained stable, contrasting with a decrease in the cumulative volume delta on offshore exchanges like Binance and Bybit. This suggests that short sellers were primarily responsible for Bitcoin’s price decline.
Intensifying Short-Selling Pressure
Over two hours, the short-selling frenzy intensified, driving Bitcoin to its $107,500 low. Open interest increased by 4%, which added $1.03 billion in exposure. Julio Moreno, head of research at CryptoQuant, commented on the dominance of short traders in perpetual futures, while also noting declining spot demand based on on-chain metrics.
Impact of Liquidations
- Total liquidations: $724 million
- Long position liquidations: $536 million
- % of liquidation incidents from long positions: 74%
The aggressive sell-off likely stemmed from macroeconomic uncertainties, geopolitical tensions, and overleveraged positions. Ryan Lee, chief analyst at Bitget, stated that the recovery following the recent Black Friday event led to profit-taking, which further applied selling pressure.
Future Market Outlook
Experts suggest that the cryptocurrency market may require time to stabilize following this intense liquidations wave. Anthony Leutenegger, CEO of Aragon, highlighted that prolonged macroeconomic uncertainties could lead to continued market volatility. Meanwhile, Moreno expressed skepticism about a rally in the near future, despite some dip-buying efforts from spot investors.
