Wake Up: Bitcoin’s Move Wasn’t Organic, It Was Engineered to Wipe Out Leverage

Bitcoin volatility wiped nearly $100B in value as a $90K short squeeze flipped into mass liquidations amid high leverage and thin liquidity.

Bitcoin’s volatility shocked traders on December 17 as prices jumped above $90,000, then crashed back near $86,000 within hours.

Market value swung by almost $100 billion during that window. The interesting part of this is that no headline caused the move. Instead, leverage, fragile liquidity and trader behaviour did all the work.

Bitcoin Volatility Explodes Near $90,000

Bitcoin’s volatility spiked as price approached $90,000. That level holds strong psychological weight and traders watch it closely, especially as large groups of leveraged short positions sat just above it.

Once price moved higher, those shorts faced forced closure and exchanges liquidated them automatically. Short sellers had to buy Bitcoin to exit, and that buying pressure pushed prices higher at speed.

According to data shared on X by analyst Santhosh, liquidation data shows that around $120 million in short positions closed during the surge. That buying did not reflect fresh demand. Instead, it reflected forced action and this process created a short squeeze.

Bitcoin Volatility Flips Into a Long Liquidation Wave

As Bitcoin reclaimed $90,000, traders rushed in and many opened leveraged long positions, expecting a clean breakout.

However, spot buying stayed weak and order books thinned fast while price stalled.

A relatively massive liquidation wave hit the market while this happened | source: CoinGlass

Once the price dipped, leveraged longs came under pressure and support levels broke one after another. Exchanges began liquidating long positions. At the end of the day, over $200 million in long liquidations followed.

This second wave explains the speed of the fall as selling pressure overwhelmed bids. Price dropped faster than it had risen and Bitcoin slid back toward $86,000, erasing most of its gains.

Positioning Data Reveals Fragile Setup

Trader positioning before the move showed a few warning signs.

For example, data from Binance revealed that many top accounts leaned long. Position size remained modest and that mix indicates that traders felt optimistic but cautious.

OKX data showed heavy changes after the swing. Larger players adjusted fast and some bought dips, while others hedged risk. 

This rate of rapid repositioning added to price noise and worsened the matter.

Market Makers and Whale Activity Explained

On chain data showed Bitcoin transfers between exchanges during the move as market makers like Wintermute moved funds as price swung.

Some traders like Santhosh say that Bitcoin’s price may have been manipulated, but there has not been strong evidence to suggest so.

In all, the entire episode fits known market mechanics where liquidation clusters, leverage, and thin books explain the move. 

Related Reading: Selling Pressure from Asia Pushes Bitcoin Lower Despite Institutional Buys

Outside Markets Add Extra Pressure

Tech stocks dropped during the same session. Nvidia, Broadcom, and Oracle fell between 3% and 6% while the Nasdaq slipped more than 1%.

AI related sentiment cooled after reports that Blue Owl Capital exited funding talks for a large Oracle data center. 

The US stock market has turned red so far | source: TradingView

That news hurt risk appetite. Considering how crypto traders often watch tech stocks, the correlation has continued to be high during periods of market stress.

Analysts are now watching the $80,000 to $85,000 zone, which has held several times this year.

Holding it could calm markets, but a break below it may invite further selling. Some analysts are warning of deeper moves if fear grows, while others point to emotional readings as a counter signal. 

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