Sudden Crypto Liquidations Trigger a Market Pullback

Over the past 24 hours, more than 157,000 traders faced liquidations, with a total value of over $480 million.

Heavy crypto liquidations occurred over the past 24 hours, amounting to more than 157,000 traders facing a total of over $480 million in losses.

According to data from Coinglass, roughly $400 million in leveraged crypto positions were wiped out. The development follows seven consecutive days of gains for Bitcoin, during which it dropped over 5%.

Crypto Market Pulls Back on Sudden Liquidations

The broader crypto market saw its market cap fall by 7%, with Ethereum (CRYPTO: ETH) declining nearly 8%. The largest single liquidation occurred on Binance.

The liquidations also coincided with a sudden rise in the 10-year U.S. Treasury yield. Data from the Institute for Supply Management revealed stronger-than-expected growth in the U.S. services sector during December.

This intensified concerns about persistent inflation, as higher yields often pressure growth-oriented risk assets, including cryptocurrencies.

Furthermore, open interest levels also contributed to the wave of liquidations. Both Bitcoin and Ethereum have lost over $1 billion in open interest since yesterday, signaling significant deleveraging in the market.

“BTC About $1.6 billion in Open Interest wiped out since the local high yesterday. ETH also saw about $1 billion in Open Interest get rinsed out on this move. Going to be interesting seeing how this plays out in the short term. Overall market still remains choppy which is usually the case near the end and start of the year,” said Daan, a popular trader and influencer, on X (NYSE:SQ) (formerly Twitter (NYSE:TWTR))

Some analysts are pointing to today’s crypto liquidation as an indicator that Bitcoin will fall below its $93,000 support level and enter a bearish cycle.

“Bitcoin is repeating its 8-year resistance pattern. Every rejection at this trendline has led to massive crashes. Expect a big crash, History’s repeating. My 2025 #BTC targets are below $30,000,” said Jacob King on X.

However, most analysts maintain a bullish outlook for Bitcoin. For instance, Rekt Capital predicts that liquidations will mark the start of a new four-year cycle.

According to its projection, a parabolic price increase may occur before the anticipated 2026 bear market.

Economic Data, Federal Reserve Policy Impact

U.S. labor market data also potentially contributed to today’s market volatility. The JOLTs Job Openings report revealed 8.098 million vacancies in November, which exceeded the 7.70 million forecast.

A strong labor market could prompt the Federal Reserve to maintain higher interest rates longer than expected, which would mean more pressure on risk assets like cryptocurrencies.

The Federal Reserve recently signaled a third rate cut but hinted at fewer reductions in 2025. Historically, rate cuts have benefited Bitcoin prices, while rate hikes have had the opposite effect.

In related news, today’s market liquidations also impacted crypto-related stocks. MicroStrategy (NASDAQ:MSTR) stock dropped 10% today, reflecting the broader market downturn.

The company has been aggressively purchasing Bitcoin throughout 2024, even making its first BTC purchase of 2025 yesterday. Marathon Digital Holdings (NASDAQ:MARA), the largest Bitcoin miner, also saw its stock price fall by 5%.

Meanwhile, not all assets have been affected by today’s downturn. The Bitget token (CRYPTO: BGB) defied the trend with gains of over 4% today, bringing its January rally to more than 10%.