Bitcoin Falls 5% in Sudden ‘Sunday Slam’ as Liquidations Surge

On Sunday there was a sudden and severe decline in Bitcoin which dropped by around 5% in just three hours. The sudden drop ended Bitcoin's

Quick overview

  • Bitcoin experienced a sudden 5% drop on Sunday, marking its worst November performance since 2018.
  • The decline triggered nearly $539 million in liquidations, primarily from long positions in Ethereum and Bitcoin.
  • Analysts suggest that the market's structural weaknesses, rather than fundamental issues, contributed to the sell-off.
  • Despite the downturn, some experts believe the price action could reset the market and lead to a stronger upward trend.

On Sunday there was a sudden and severe decline in Bitcoin which dropped by around 5% in just three hours. The sudden drop ended Bitcoin’s worst November performance since 2018 and led to large liquidations throughout the cryptocurrency market.

Sharp Drop after Weekend Stability

Bitcoin was trading at about $91,500 for the majority of the weekend, indicating a stabilization as November drew to a conclusion. However according to TradingView statistics the price abruptly dropped to $86,950 on Coinbase on Sunday.

The action was taken soon after Bitcoin closed the week at $90,411 and earned its first green weekly candle in four weeks. This weekend was no exception to the analysts’ observation that significant market movements frequently take place on Friday and Sunday nights.

No Clear News Catalyst behind the Crash

There was no significant news event connected to the decline, according to the financial analysis platform Kobeissi Letter. Rather, the loss seemed to be caused by an unexpected surge in sales, which in turn set off a chain reaction of forced liquidations.

According to the platform, this selling “caused a domino-effect sell-off,” which was made worse by the market’s high number of leveraged holdings. When the market started to fall many traders were exposed since they had bought long bets anticipating price increases.

 $539 Million in Crypto Liquidations

In the past day almost 180,000 dealers were liquidated according to CoinGlass.
Nearly 90% of the $539 million total liquidations came from long bets in Ethereum and Bitcoin.

The majority of these liquidations took place in the hours after the price decline demonstrating the speed at which leverage can magnify market movements.

Worst November Since 2018

Bitcoin had its worst monthly performance of the year at the end of November down 17.49%. Additionally November was the weakest since 2018 when a severe bear market caused Bitcoin to drop more than 36%.

Some analysts believe there are reasons to remain hopeful despite the bad month.

Analysts Say the Dip Could Be Healthy

According to cryptocurrency researcher “Sykodelic” the price action may potentially be encouraging for the upcoming month.
He maintained that taking downside liquidity early is frequently a good way to reset the market.

  • He also mentioned:
  • There was less chance of overextending because there was no Sunday pump.
  • The gap in CME had previously been filled.
  • Long positions worth more than $400 million had been cleared.
  • He believes that these elements could aid in stabilizing Bitcoin and even set the stage for a more robust upward trend.

Structural, Not Fundamental Weakness

Additionally Kobeissi stressed that there doesn’t seem to be a fundamental problem causing the current weakness. Rather, they characterized the situation as a “structural bear market” that is impacted by short-term trading behavior and leverage.

Looking Ahead

The sharp drop in Bitcoin underscores the ongoing volatility of the cryptocurrency market particularly on weekends when liquidity is low. Some analysts think that this cleanup of leveraged holdings could help Bitcoin strengthen its base in the upcoming weeks despite the steep loss unsettling traders.

ABOUT THE AUTHOR See More
Arslan Butt
Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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