On December 1st, during the Asian morning session, the price of Bitcoin fell nearly 5%, dropping below $87,000, erasing recent gains. This decline is primarily driven by risk-averse sentiment triggered by soaring Japanese government bond yields, along with low trading volume leading to a severe lack of market liquidity. Data shows that Bitcoin has declined from the $91,000 consolidation range, with total market capitalization of Crypto Assets evaporating by about $150 billion.
10x Research pointed out that the crypto market has experienced the lowest trading volume in a week since July, with a thin order book unable to withstand institutional selling pressure, causing the price decline to evolve from a technical correction into a liquidity crisis. BRN research director Timothy Misir stated that this is not a controlled correction, but rather a liquidity shock caused by position adjustments and macro repricing. In November, Bitcoin's market capitalization fell by nearly 18%, and market momentum quickly reversed, forcing leveraged long positions to be liquidated.
The derivatives market shows a differentiation of risks. Bitcoin traders are reducing leverage, with open interest in futures falling to $29.7 billion and the funding rate at only 4.3%. In contrast, Ethereum traders are still excessively leveraging despite low network activity, with the funding rate rising to 20.4% and open interest increasing by $900 million, indicating an imbalance in risk pricing.
Macroeconomic factors have also exacerbated market volatility. The yield on Japan's 10-year government bonds has risen to 1.84%, and the two-year yield has broken through 1% for the first time, reshaping market expectations for yen arbitrage trades. Arthur Hayes pointed out that expectations of a rate hike by the Bank of Japan will increase the funding costs for global speculators. Additionally, the price of gold has risen to $4250 per ounce, reflecting the hedging demand of global traders against inflation and fiscal risks.
On-chain data indicates that funds are flowing towards retail investors, with long-term holders increasing their holdings at a slower pace. Market supply is concentrated in the hands of stronger investors, but there is still an excess above the key resistance level. The balance of stablecoins on exchanges has increased, showing that funds are ready, but have not yet entered the market aggressively. The current market is focused on the support level in the mid-80,000s; if it cannot return to the low 90,000s, prices may further test the vicinity of 80,000. (CryptoSlate)
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