The "Trump Trade" Hype Fades, Bitcoin Plunges Nearly $5,000, Liquidations Sweep the Market

The "Trump Trade" Hype Fades, Bitcoin Plunges Nearly $5,000, Liquidations Sweep the MarketOn November 12th, Bitcoin's price, after breaking through the $90,000 mark, suddenly plummeted, falling nearly $5,000 in a mere 3 hours. This downturn caught the market off guard, rapidly cooling the frenzy brought about by the "Trump Trade

The "Trump Trade" Hype Fades, Bitcoin Plunges Nearly $5,000, Liquidations Sweep the Market

On November 12th, Bitcoin's price, after breaking through the $90,000 mark, suddenly plummeted, falling nearly $5,000 in a mere 3 hours. This downturn caught the market off guard, rapidly cooling the frenzy brought about by the "Trump Trade."

On the same day, Bitcoin reached a peak of $90,070.1 before tumbling, hitting a low of $85,500. As of press time, the price stands at $97,579.8. Ethereum followed suit, surging to $3,449 before dipping as low as $3,214, a drop exceeding $200. Dogecoin experienced a similar trend.

Coinglass data reveals that over the past 24 hours, over 260,000 accounts have been liquidated across the entire network, with a total liquidation value nearing $1 billion.

Recently, Bitcoin's price has reached record highs, surpassing multiple integer thresholds, garnering widespread market attention. Numerous institutions and analysts have expressed bullish sentiment regarding Bitcoin's future trajectory. Geoff Kendrick, Global Head of Digital Asset Research at Standard Chartered Bank, predicts that Bitcoin's price will reach $125,000 by the end of the year and $200,000 by the end of 2025, following Trump's election victory. Nick Philpott, co-founder of digital asset broker Zodia Markets, states they anticipate a target range of $75,000 to $80,000 for Bitcoin's price rise triggered by Trump's win, and expect ETF funds and widespread cryptocurrency inflows to propel Bitcoin to $100,000 in early Q1 of next year, possibly even sooner.

The options trading market also harbors significant expectations for Bitcoin's price surge. With investors setting their sights on $100,000, according to data from cryptocurrency options exchange Deribit, a significant number of open contracts wager on Bitcoin reaching this milestone by year-end. As of Monday morning, approximately 9,635 Bitcoin (valued at roughly $780 million) worth of open contracts bet on Bitcoin touching $100,000 by December 27th, constituting the largest trade for contracts maturing on that date. However, Deribit estimates that the probability of this contract expiring in profit is merely 18.6%.

Nick Foster, founder of Derive decentralized finance protocol, points out that the market experienced substantial volatility following the US election, and traders have poured significant funds into $100,000 call options expiring on December 27th, making it one of the most closely watched trades lately.

Despite the burgeoning bullish sentiment among investors, a degree of caution persists within the market. Some analysts highlight the uncertainty surrounding whether Trump will deliver on his crypto-related campaign promises, as there has been no tangible progress. With potential future shifts, traders need to be vigilant about risk.

It's noteworthy that, driven by Bitcoin, the global cryptocurrency market capitalization has surpassed $3 trillion for the first time since November 2021.

Fueled by robust investor appetite for cryptocurrencies, BlackRock's $35 billion iShares Bitcoin Trust recorded a daily net inflow of nearly $1.4 billion on Thursday. Currently, the fund's total assets exceed those of BlackRock's other $33 billion iShares Gold Trust.

More comprehensive data from Sosovalue reveals that, over the three trading days following November 5th, 12 spot Bitcoin exchange-traded funds (ETFs), including BlackRock's IBIT and Fidelity's FBTC, collectively witnessed net inflows totaling $2.3 billion.

Bitcoin's sudden price plunge has sparked concerns about its future trajectory. Investors need to closely monitor market fluctuations and invest prudently.