Bitcoin dips slightly while altcoins plummet—Is the bull market still alive?
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Bitcoin dips slightly while altcoins plummet—Is the bull market still alive?
The number of liquidations exceeded that of the "March 12 crash."
Navigating Web3 tides with focused insightsBy: 1912212.eth, Foresight News
Bitcoin failed to sustain above the $100,000 mark after briefly surpassing it late yesterday evening. It subsequently declined and dipped as low as around $94,150 by 5 a.m. today, before slightly recovering to hover near $96,000.
While Bitcoin did not experience a significant drop, Ethereum’s performance has been worrying. This morning at around 7 a.m., ETH began falling from $4,000, plunging to approximately $3,500 before weakly rebounding to around $3,700—a single-day decline exceeding 5%. With Ethereum unstable, altcoins collectively exhibited signs of panic.
In terms of 24-hour declines, major public blockchain tokens saw substantial losses: SOL dropped over 8%, SUI over 12%, APT and SEI both over 16%, while AI-related tokens fared worse—WLD fell more than 19%, ARKM over 20%, and IO down over 12%. Among Layer-2 tokens, OP declined over 14% and ARB over 17%.
The derivatives data is grim. According to Coinglass, total liquidations across all platforms reached $1.725 billion in the past 24 hours, with long positions accounting for $1.557 billion. Approximately 574,168 traders were liquidated, including one massive $16.69 million ETH/USDT liquidation on Binance—the largest single event.
If measured solely by the number of liquidations, today's figure even exceeds that of the "March 12" crash, which previously affected around 100,000 traders.
As markets bleed red, what exactly caused this sharp downturn?
Excessive Leverage in the Market
There is an abundance of leveraged positions across the market. As early as December 6, Mike Novogratz, CEO of Galaxy Digital, warned during a CNBC interview (commenting on BTC breaking $100,000) that a global Bitcoin buying frenzy was underway—one of the first truly global asset rushes. He cautioned that the system contains excessive leverage and predicted one or two violent pullbacks—"testing your soul"—that would ultimately purge these leveraged positions.
Since Trump’s election win, open interest in Bitcoin futures has surged dramatically—from $39 billion on November 5 to a peak of $60 billion by early December—reflecting rampant trading and speculative activity.
Taking crypto-mad South Korea as an example, CryptoQuant data from last month showed that the monthly stablecoin trading volume on the country’s top five CEXs—Upbit, Bithumb, Coinone, Korbit, and GOPAX—was approximately 16.17 trillion KRW ($11.5 billion). This figure includes total buy/sell volumes of stablecoins such as Tether (USDT) and USDC issued by Circle, and represents a sevenfold increase compared to the roughly 2 trillion KRW recorded at the beginning of the year. It also marks the first time South Korea’s monthly stablecoin trading volume exceeded 10 trillion KRW.
Yesterday, CryptoQuant analyst ShayanBTC shared a chart showing that Ethereum funding rates—a key sentiment indicator in the futures market—had spiked to their highest levels in months, indicating widespread trader expectations for new all-time highs. However, the market may require a correction to maintain its momentum.
Recently, during the altcoin frenzy, annualized borrowing rates for USDT on centralized exchanges like Binance and Bybit soared above 50%. This suggests many users were increasing leverage by borrowing USDT against collateral. On leading on-chain lending platform Aave, deposit rates for USDC on Ethereum briefly reached as high as 46% annually, with USDT deposits peaking at 34%.
At the time of writing, borrowing rates for stablecoins across exchanges and on-chain platforms have returned to normal levels.
Declining Global Liquidity
Cryptocurrencies are increasingly influenced by macroeconomic factors, yet the global liquidity underpinning their valuations is shrinking.
Many investors anticipate continuous rate cuts by the Federal Reserve, but several institutions now predict limited easing ahead. Economists at Morgan Stanley expect only two 25-basis-point cuts—in December and January—totaling just 50 bps.
With diminishing liquidity fuel available to the market, upward price momentum weakens. The chart above shows a steep decline, prompting some liquidity analysts to warn of an imminent correction.
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In the 2017 cycle, a similar situation occurred in December 2017, followed by the end of the bull run one month later.
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In the 2021 cycle, it happened again in April 2021, with altcoins crashing 50% within a month.
Juan M. Villaverde, Weiss Crypto analyst, noted in his assessment of this downturn that now might not be the time to exit entirely, but it should be seen as a warning sign. He pointed out that recent market conditions appear unhealthy, and such cycles historically culminate in dramatic altcoin collapses. The $100,000 level for Bitcoin is critical: if BTC can break and hold above this level again, the current altcoin rally may continue. But if Bitcoin fails to stabilize above $100,000, altcoins are likely to fall back toward their starting points.
Matrixport added in its analysis that although stablecoin-related metrics remain relatively high compared to the past 12 months, weekly inflows have significantly cooled—from a peak of $8 billion to $4 billion.
This metric warrants close monitoring. If inflows continue to shrink, it could signal an extended consolidation period, especially during the typically quiet year-end holiday season. Even if the slowdown persists, outlook for 2025 remains positive. Bitcoin prices are expected to rise steadily, though short-term gains may moderate.
Additionally, CryptoQuant data revealed that during Bitcoin’s price drop, Coinbase premiums spiked sharply.
Such rebounds often indicate that while retail investors are panicking and selling off aggressively, institutional buyers in the U.S. are stepping in and purchasing heavily.
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