Cryptocurrency Market Plunges: Bitcoin Crashes Below $97,000, Triggering Mass Liquidations

Cryptocurrency Market Plunges: Bitcoin Crashes Below $97,000, Triggering Mass LiquidationsThe cryptocurrency market experienced a dramatic downturn in the past 24 hours, with Bitcoin plummeting below $97,000, a 4.69% drop, sparking widespread panic

Cryptocurrency Market Plunges: Bitcoin Crashes Below $97,000, Triggering Mass Liquidations

The cryptocurrency market experienced a dramatic downturn in the past 24 hours, with Bitcoin plummeting below $97,000, a 4.69% drop, sparking widespread panic. This wasn't an isolated incident; Ethereum fell nearly 8%, Dogecoin over 10%, and a general air of pessimism permeated the market. CoinGlass data revealed over 170,000 investors were liquidated, resulting in losses exceeding $562 million (approximately 4.1 billion RMB), signifying a sharp increase in market risk.

Data released by the Institute for Supply Management (ISM) showed that US service sector growth in December 2024 exceeded expectations, fueling concerns about "sticky inflation." This news directly led to a rapid rise in 10-year US Treasury yields. Rising yields typically pressure growth-oriented risk assets like cryptocurrencies, further exacerbating the market decline.

According to the Securities Times, market analysts noted that on-chain data indicates cryptocurrency leverage is nearing levels seen at the 2021 bull market peak. Such a highly leveraged market is extremely fragile, making it susceptible to panic selling and triggering a chain reaction of price crashes and liquidations.

The cryptocurrency market's crash quickly impacted US equities, with blockchain-related stocks experiencing significant overnight declines. MicroStrategy and Canaan Inc. fell over 9%, Coinbase Global dropped over 8%, and Bitcoin Digital and The9 Limited also saw declines exceeding 6%, reflecting market anxieties about the future of cryptocurrencies.

Looking back at 2024, Bitcoin's price surged over 120%, particularly after Trump's election victory in November fueled a rapid price increase, surpassing $100,000 in early December. However, this rally was short-lived. From mid-to-late December, profit-taking and expectations of a slower pace of Fed rate cuts caused Bitcoin to retrace from its all-time high, consolidating above $90,000 until a brief surge past $100,000 on January 6th, followed by another decline.

Regarding Bitcoin's previous meteoric rise, top Wall Street technical strategist Katie Stockton warned of weakening upward momentum, predicting a multi-week sell-off potentially finding support around $84,500. She further suggested that if the price continued to fall, the next support level could be at $73,800.

James Butterfill, Head of Research at CoinShares, a cryptocurrency asset management firm, predicted a 2025 Bitcoin price range of $80,000 to $150,000. He cited a favorable US regulatory environment as a key factor supporting price increases, ultimately forecasting a long-term price of $250,000. However, Butterfill cautioned that this target wouldn't be reached in 2025, with the lower end of his predicted range ($80,000) representing a scenario where Trump's promised pro-crypto policies fail to materialize. He added that "disappointment and skepticism regarding Trump's proposed crypto policies could trigger a significant market correction."

Notably, on December 4th, Federal Reserve Chairman Jerome Powell addressed cryptocurrencies and the potential for a US Bitcoin national reserve at the New York Times' DealBook Summit. He emphasized that Bitcoin's competitor is gold, not the US dollar, likening it to "digital gold." Powell argued that Bitcoin's volatility prevents its use as a payment or store-of-value tool, making it a competitor to gold rather than the dollar.

The Economic Daily previously reported that Bitcoin's price has been notoriously volatile since its inception, with dramatic price swings being the norm, highlighting significant market risks. Yu Jianing, co-chair of the Blockchain Special Committee of the China Communications Industry Association, analyzed that Bitcoin's price fluctuations are influenced by various factors, including market sentiment, macroeconomic conditions, technological innovation, and regulatory policies. Government stances on and policies regarding cryptocurrencies are constantly evolving; any new regulatory measures can significantly impact prices. Furthermore, global macroeconomic changes, such as interest rate changes, inflation rates, and international trade relations, also affect the value of Bitcoin and other cryptocurrencies. The risk of hacking and security vulnerabilities faced by cryptocurrency exchanges and wallets further increases market uncertainty.

In conclusion, the recent cryptocurrency market crash resulted from a confluence of factors, including macroeconomic conditions, the inherent fragility of a highly leveraged market, and investor sentiment. Future market trends remain highly uncertain, thus investors should proceed with caution, avoiding blind following of trends, and prioritizing rational investment and risk management.

Disclaimer: The content and data in this article are for informational purposes only and do not constitute investment advice. Please verify information before use. Any actions taken based on this information are at your own risk.