TL;DR:
- Bitcoin’s fall below $86K triggered $637M in liquidations, mostly from long positions.
- Strategy CEO comments and Tether insolvency concerns intensified volatility, while China’s renewed crypto warnings added pressure.
- Despite the crash, prediction markets show low expectations for a crypto winter, reflecting a gap between trader fear and long-term sentiment.
A volatile weekend sent crypto markets spiraling as Bitcoin’s steep drop triggered cascading liquidations across major assets. The abrupt move shook traders already uneasy over Tether concerns and large-holder signals, shaping one of the most dramatic downturns in recent weeks.
Market Turmoil Deepens as Liquidations Accelerate
Bitcoin fell below $86,000, driving total market liquidations to $637M, with long positions accounting for the bulk of the wipeout, according to CoinGlass. The top crypto is now down over 21% in the past month and trades near $86,800, sitting 31% under its all-time high. Ethereum and XRP mirrored the slump, sliding 5.6% and 6.5% respectively as broader altcoin sentiment deteriorated.
Several catalysts fueled the selloff. SynFutures COO Wenny Cai noted that a momentum-driven drop triggered oversized long liquidations, amplifying the decline as forced selling spilled into spot and derivatives markets. Additional pressure came from Strategy CEO Phong Le, who indicated the company could sell Bitcoin to fund dividend payments under certain conditions. Strategy holds 649,870 BTC valued at $56.26B, a figure that intensified market sensitivity to remarks affecting perceived supply.
Still, prediction market Myriad shows traders unconvinced that Strategy will sell, assigning only a 5% probability of such action this year. This disconnect between market fear and bettor conviction underscores the uncertainty shaping short-term narratives.
Another driver was concern over Tether’s stability. BitMEX co-founder Arthur Hayes pointed out that a 30% decline in Bitcoin and gold could theoretically wipe out the issuer’s equity, raising insolvency worries. Cai warned that any doubts surrounding crypto’s largest stablecoin can widen liquidity premia, prompting margin desks to cut exposure and heightening volatility.
Sentiment weakened further after China’s central bank reiterated that crypto activity remains illegal and flagged stablecoin risks, adding weight to the downturn. Looking ahead, Cai expects December trading to stay choppy, with a potential near-term washout and subsequent buyer rotation.
Despite the turmoil, Myriad bettors place only a 12% chance on a crypto winter. The resilience of long-term expectations contrasts sharply with the weekend’s violent shakeout, leaving markets oscillating between fear and cautious optimism.
