Over the next two hours, short selling intensified, prompting a 3.5% drop to $107,500 as spot sellers joined the fray. Open interest climbed 4% to add another $1.03 billion in exposure.
“Short traders are dominating in the perpetual futures markets right now, and spot demand is still in contraction based on on-chain data,” Julio Moreno, head of research at CryptoQuant, told Decrypt.
Amid the derivative-driven chaos, a key divergence emerged as spot CVD on U.S.-based exchange Coinbase remained "mostly positive," indicating consistent buy-the-dip activity from spot investors.
The spot bid-ask delta indicator showed increased bid activity, confirming that spot buyers were absorbing the selling pressure from leveraged shorts, per CoinGlass data.
The violent price move has triggered a $724 million liquidation event in 24 hours. Long positions bore the brunt, accounting for $536 million of the total, indicating that bulls levered up, hoping for a recovery.
“The drop is due to a mix of macroeconomic uncertainty, rising geopolitical tensions, and a spike in liquidations from overleveraged positions,” Ryan Lee, chief analyst at universal exchange Bitget, told Decrypt.
The recovery after the Black Friday event was met with “profit-taking, adding further selling pressure,” Lee noted.
Looking ahead, the crypto market is likely going to need “time to rebalance or find its footing after such a big flush-out,” Anthony Leutenegger, CEO of Aragon, told Decrypt. “As long as macro uncertainty lingers... we might expect continued volatility.”
Moreno remains bearish despite the dip-buying efforts from spot investors and believes the “odds of a rally are tilted to the downside.”
decrypt.co
