Leveraged Bitcoin Traders Flushed Out In Epic Overnight Crash

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by Tyler Durden
Saturday, Dec 04, 2021 - 08:47 PM

The price of Bitcoin was rangebound on early Friday around the $56k handle. The world's largest cryptocurrency then spiked when the kneejerk read of the November payrolls came in as very disappointing, seen as postponing the Fed's plans to accelerate the taper but then began to decline during the US cash session to about $54k-$53k handle by late afternoon as the narrative flipflopped and near unanimous consensus emerged around a Fed announcement that Powell would announce a much faster taper on Dec 15 leading to rate lift off by June.

Then at midnight into the early hours of Saturday morning, during the traditionally illiquid Asian session when things normally go splat in the night for cryptos as one or more super levered Asian momentum chasers blow up, Bitcoin suffered a massive liquidation and crashed down to the $42k level, tumbling into a bear market. Price has recovered some, now trading around $47k. 

We noted that the action was that of a margined whale getting liquidated...

... an assessment Vijay Ayyar, head of Asia Pacific with crypto exchange Luno in Singapore agreed with, telling Bloomberg the action overnight was leveraged buyers of Bitcoin being flushed out. 

"Markets have also been jittery with all the uncertainty around omicron, with cases now appearing in many countries," Ayyar said. "It's hard to say what that means for economies and markets and hence the uncertainty."

And sure enough, according to Coinglass, over 410K crypto accounts were liquidated in the past 24 hours totaling $2.6 billion with the largest liquidation being $27 million.

So far, Bitcoin has found support just below the 200dma. 

The plunge is just another sign of risk aversion sweeping across global markets as equities sink and fate havens soar. Spiking inflation is forcing central banks to tighten monetary policy, reducing liquidity for risk assets. However, as we first pointed out yesterday, we are now at the point where the market is starting to price in the first future rate cut - sometime in 2023-2024 - resulting from the Fed's overtightening cycle.

The omicron variant of COVID-19 has also compounded risk aversion as it derails the global economic reopening. 

Today's global cryptocurrency market cap is $2.28 Trillion, down 17.5% in the last 24 hours. Total cryptocurrency trading volume in the last day is at $236 billion. Bitcoin's market cap of all crypto is 38.68%. 

That said, El Salvador President Nayib Bukele is using the dip to buy even more Bitcoin. 

And as the storm of schadenfreude readies to strike, declaring 'bitcoin is dead', remember, this is the 434th time that call has been made...


Finally, we note that while Ethereum (and every coin) has been crushed, it has outperformed Bitcoin in this carnage and has pushed up to its strongest relative to the larger market cap coin since 

"It seems that investors are taking ETH as a hedge here," said Crypto Birb, an independent market analyst in a tweet Saturday, pointing to a four-hour ETH/BTC price chart (as shown below) that showed the pair retracing sharply after testing its 200-period moving average (the orange wave) as support.