Bitcoin Struggles for Stabilization After Price Collapse – Liquidations Reach Record Levels

Bitcoin Records Worst November in Years

The crypto market remains battered following the severe sell-off in November. Bitcoin has lost approximately one-third of its value since reaching a record high of over $125,000 in October and is currently trading around the $91,000 mark^[1]. While the leading cryptocurrency is somewhat above the lows of the previous week, the recovery movement has proven difficult.

November 2024 marks Bitcoin's worst monthly performance of the year. With a decline of 17.49 percent, the cryptocurrency recorded its weakest November performance since 2018, when Bitcoin lost 36.57 percent in a brutal bear market^[2]. Other leading cryptocurrencies such as Ethereum, Solana, and XRP are also trading significantly below their levels at the start of the month^[1].

Sunday Flash Crash Triggers Liquidation Wave

Sunday brought another so-called "Sunday Slam" – a sudden price drop of over 5 percent^[2]. The flash crash was triggered by "a sudden selling wave that created a domino effect, which was further amplified by historically high leveraged positions," explained analyst Kobeissi^[2].

The impact on the market was massive: over 180,000 traders were liquidated in the past 24 hours, with total liquidations reaching $539 million^[2]. Nearly 90 percent of these liquidations involved long positions, primarily in Bitcoin and Ethereum^[2]. The majority of liquidations occurred within hours of the price collapse.

Structural Weakness or Temporary Correction?

Analysts assess the current market situation differently. Kobeissi described the current crypto bear market as "structural in nature" and emphasized: "We do NOT view this as a fundamental decline"^[2]. This assessment suggests that the price weakness could primarily be attributable to technical and liquidity-related factors.

Some traders remain optimistic despite recent turbulence. Analyst "Sykodelic" commented: "This is actually a great start to the month." He pointed out that there was no Sunday pump, the CME gap has already closed, and $400 million in long positions have already been unwound^[2]. The clearing of downside liquidity is a positive sign for further development.

Data Gap Increases Market Uncertainty

Adding to the challenges, the macro market is currently grappling with a historically unprecedented data gap. The 43-day U.S. government shutdown from early October to mid-November resulted in the absence or delayed release of key economic indicators^[1]. For traders and investors, this means that the few available data points receive heightened attention and could potentially lead to increased volatility^[1].

Particular focus this week is on the core PCE rate, which serves as an important inflation indicator and could influence crypto market prices^[1]. The data gap following the U.S. shutdown increases volatility and creates additional trading opportunities in the crypto market^[1].