The recent crash in the broader crypto market on December 9 sent shockwaves throughout the industry, with Bitcoin dropping to as low as $94,150 from $101,109, marking a -7% decline. However, the altcoin market suffered even more significant losses, with Ethereum plummeting by -12%, XRP by -22%, Solana by -15%, Cardano by -23%, Dogecoin by -19%, and Shiba Inu by -25%.
According to data from Coinglass, over 562,000 traders were liquidated in the past 24 hours, totaling $1.7 billion in liquidations. The largest single liquidation order occurred on Binance in the ETHUSDT pair, amounting to $19.69 million. Of the total liquidations, $1.55 billion were from long positions.
Bitcoin’s leverage flush was relatively restrained compared to altcoins, with $143 million in BTC longs liquidated. On the other hand, ETH saw $219 million in liquidations, SOL $57 million, DOGE $86 million, XRP $53 million, and ADA $22 million.
This recent event marked the largest leverage flush in the crypto market since April 2021, when a record $10 billion in crypto futures liquidations occurred in a single day, surpassing the previous record of $5.77 billion.
Following the crash, Bitcoin and most altcoins experienced a sharp upward recovery, although they have yet to reach their pre-crash levels. BTC remained down by -2.4%, ETH by -4.8%, XRP by -9.6%, SOL by -6.4%, and DOGE by -8.4% over the past 24 hours.
The cause of this market crash was attributed to increased selling pressure on Coinbase, where traders began selling aggressively before the major cascade. Overheated funding fees and rising open interest levels left overleveraged positions vulnerable once the selling pressure intensified.
Despite the chaotic market conditions, there were signs of accumulation in Ethereum, suggesting a major buyer may have taken advantage of the dip. However, XRP experienced abnormal sell orders on Coinbase, leading to a cascade of big sell-offs that plunged the market by over 5%.
As the market stabilized and prices began to bounce back, analysts like ltrd and Alex Krüger highlighted the normalizing effect of leverage flushes in hot and highly leveraged markets. Krüger emphasized that such events are essential for disciplining crypto traders and baptizing newcomers to the market.
In conclusion, while the recent crash caused turmoil in the crypto market, analysts remain optimistic about the future of digital assets. Bitcoin traded at $97,401 at the time of writing, showing resilience in the face of market volatility.