WOO X Research: Did the cow really go away overnight?
2024-12-18 15:16

On December 5, bitcoin officially broke the $10 0,000 mark, indicating the start of a new wave of crypto. While the market mood was boiling, on December 10, bitcoin suddenly saw a sharp drop, from $10 0,000 to a low of $94,100 in six hours

Meanwhile, excluding bitcoin and the copycoin (Ethereum), it faces a more severe decline, reaching 14%

According to Coinglass data, the amount of exploded within 24 hours was as high as 17. [] 3.4 billion, and the number of exploded was as high as 58 0,000, far exceeding the 50% drop of bitcoin on March 12,2020, and the size of 10 0,000 people.

The drop was caught off guard, and while the price then rose to $97,000, the forced liquidation was never returned. Is this drop just a normal pullback? Or has the peak of this round been reached? Let WOO X Research take you to see the reasons behind the crash and the future outlook!

Source: Coinglass

 

Shanzhai market sentiment is high, there is a huge amount of leverage

In November 14, WOO X Research has published an article, which predicted that the market cycle is in the "eve of the outbreak of the coin", at that time, the bitcoin market share of about 61%, less than a month this data has fallen to 55%, the current market cycle set for the outbreak of the coin stage.

Meanwhile, Total 3's total market value rose above $1 trillion, up 55% in a month

Plate rotation to copycoin rise is not the main reason for the decline, but too strong optimism led to a lot of leverage in the market.

ETH and SOL, which represent copycat currencies, both hit record highs in contract holdings, rising in tandem with the token price. This phenomenon can be interpreted as saying: crypto users do not actually have the currency, use leverage to go long, the higher the position represents the more bullish sentiment.

Before tonight's plunge, ETH holdings reached $27 billion, compared with $17 billion a month ago, up nearly 60% in a month, and the currency price did not follow the huge increase in holdings, and speculative sentiment was strong.

The example of ETH is just a microcosm, with the holdings of most fake currencies increasing more strongly, such as Doge, Xrp, Pepe, etc. Shanzhai currency can be regarded as "leveraged" bitcoin, coupled with the leverage characteristics of contract trading, there is too much leverage in the current market, the market needs to be cleared to move forward.

Source: Coinglass

In addition, from the perspective of capital rates, it can also be observed that it was overheated before the collapse.

In the past one month, the trend of Bitcoin and the capital rate of copycat currency. In the process of $70,000 to $10 0,000, the capital rate of copycat currency did not significantly rise, and the annualized interest rate mostly fell in the range of 10% -30%, and only a few days were incoherent and sporadic currencies exceeded 100%

It can be seen from the figure below that after December 4, the shanzhai coin market has seen consecutive days and the capital rate of most shanzhai currencies has exploded, mostly falling in the range of 60% -100%.

The resonance rise in holdings and capital rates again confirms the existence of a lot of leverage in the market, and the main reason for the decline is simple: the interlocking effect of highly leveraged clearing.

Source: Coinglass

 

External events: hawkish talk + a Christmas holiday

Above mentioned for encryption market has a lot of leverage, as for external events is the fed release hawkish comments, the situation of Australia's largest bank group Macquarie bank, analysts said that the inflation trend has recently slowed, since September unemployment is lower than expected, and the U. S. financial markets, is the main factor to promote Fed more hawkish position.

Combined with the CPI and unemployment data on December 11 and 12, as well as the upcoming Christmas holiday, understandable in the face of many uncertainties.

Conclusion: The bull market is still there, and liquidation is the norm

This decline we prefer to clear leverage, and the outlook for 2025 remains unchanged.

When it comes to the currency circle, speculation, and high leverage is an emotional indicator of this market. Most of the high sentiment does not mean that it can push the market forward, but that new capital needs to be injected into the market. Back to the essence of the rising currency price, is the law of supply and demand. It can be observed that the interest of various institutions in either Bitcoin or Ethereum has not decreased, and spot ETF continues to have net inflow, among which Ethereum has had net inflow for 11 consecutive days, and even made history on November 30, with daily net inflow exceeding Bitcoin spot ETF.

In addition, various institutions have applied for ETFs of other currencies, such as SOL and XRP, which is certain that institutions still hold a strong interest in the crypto market. When the supply remains and the external demand increases, whether it is Bitcoin or copycoin, the crypto bull market is expected to continue.

Source: sosovaule