Why Bitcoin is Dropping? Market Volatility Triggers $500M in Liquidations

This bull season, Bitcoin has seen one of the biggest price pumps in its history as it traded to almost $100,000. Looking ahead, analysts believe that Bitcoin could see substantial growth in 2025, driven by a mix of macroeconomic conditions, institutional participation and seasonal market behavior.

Why Is Bitcoin Retracing?

However, as of writing, Bitcoin’s price has dropped to $96,355, which does not look promising. However, it is not surprising to witness minor corrections even during attempts to reach all-time highs.

After several days of charting new peaks and coming less than $200 away from $100,000, bitcoin’s price has halted and dropped from its Friday high. At first, it dropped to $98,000 on Sunday, but the bears kept the pressure on and bitcoin fell even further to under $96,000. Its market cap has slipped below $1.9 trillion after losing over $60 billion since Friday.

Liquidations Near $500M!

The market volatility has harmed over-leveraged traders, with nearly 200,000 such market participants wrecked in the past 24 hours. The total value of liquidated positions is up to almost $500 million, with the major share belonging to longs, with $383 million.

Titan of Crypto provided the following insights on the situation-

Notably, the rapid price drop of BTC accelerated following Iran’s statements regarding retaliation against Israel. As of the writing, the price fell under $96,000, impacting altcoins as Ethereum $3,326’s decline began. DOGE saw an 11% drop, XRP experienced a 16% decrease, and ADA Coin fell by 14%. 

Analysts View On BTC Drop

In an X post on November 23, Ali Martinez shared an intriguing prediction on Bitcoin’s potential price movement. He noted that the TD Sequential, used to spot potential price reversals, has indicated a sell signal on Bitcoin’s 12-hour chart, suggesting an incoming price dip. 

If BTC undergoes the much-anticipated correction as indicated by the TD Sequential and other factors, it could fall to $91,583 or even further slide to $85,610. He noted that BTC needs to close above $100,535 to invalidate the sell signal.

Peter Brandt Notes Consistent Features Of Bull Market Cycles

The veteran trader Peter Brandt, has highlighted two consistent features of past Bitcoin bull market cycles: 1) Dominant Parabolic Trends Each bull market has been marked by a parabolic price increase. However, the strength of these parabolic movements has declined with each cycle. 2) Major Corrections After breaking out of its parabolic rise, Bitcoin has historically experienced a sharp correction, typically around 80% (±5%) from its peak.

Brandt has shared the current parabolic profile for Bitcoin, noting that while the pattern is clear, the exact course may develop as the market progresses. If the chart proves to be right, the Bitcoin rally might continue in January. However, the chart also suggests a substantial correction in 2025.

Impact Of Macroeconomic Events on BTC

The rapid increase of hostilities in the Middle East has profoundly impacted Bitcoin’s performance. Following Iran’s missile attack on Israel in early October, Bitcoin dropped significantly, backing the idea that geopolitical unrest tends to push investors towards traditional safe havens like gold, rather than Bitcoin.

Also, Macroeconomic events in the U.S. continue to play a significant role in Bitcoin’s price action. The U.S. labor market has remained strong, and recent payroll reports exceeded expectations, suggesting that the Federal Reserve may continue cutting rates. Historically, lower interest rates have benefited Bitcoin, as investors seek riskier assets for higher returns.

The Outlook Remains Positive

Nonetheless, the medium-term outlook remains positive; historical data can provide motivation for investors looking towards December, despite temporary fluctuations. Daan Crypto Trades shared the monthly performance table of BTC, noting the following:

Even during bullish trends, Bitcoin often experiences corrections. Considering Bitcoin’s recent price movement and events such as excitement around Donald Trump’s electoral victory alongside increased ETF inflows, a continuation of an uptrend is a strong possibility.