$860 million liquidation storm erupts, Bitcoin's decline this week is fierce

The crypto market started the new week in trouble. Bitcoin rapidly slid from above $95,000 within just a few hours, piercing through the $93,000 level and remaining weak on the downside. As of the latest quote, Bitcoin hovers around $89,820, up 0.48% in the past 24 hours, with a trading volume of approximately $144 million. Although the decline has eased compared to earlier, this liquidation storm has once again exposed the market’s fragile internal structure.

Over $8.6 billion in liquidation in a single day, the reality of bulls being crushed

Data agency CoinGlass’s monitoring shows that this sharp correction from the high of $95,000–$97,000 triggered a chain reaction. Over the past 24 hours, the derivatives market has experienced over $860 million in forced liquidations, with $780 million coming from the collapse of long positions.

The story behind this figure is not complicated: during the previous rebound, a large amount of bullish capital heavily concentrated bets. Once the price reversed, these leveraged long positions were instantly forced to close, like a series of falling dominoes, creating a “bull trap” style crash. The more liquidations and losses, the more panic among investors, further driving down the price. Meanwhile, safe-haven asset gold surged 1.7% to $4,600 per ounce, reflecting market concerns over geopolitical risks—after the US announced tariffs of 10% on Denmark and seven European countries, boosting demand for safe assets.

Derivatives-driven false breakout

On-chain analysis authority Glassnode’s weekly report reveals an unsettling truth: Bitcoin’s previous attack towards $96,000 was essentially a false breakout engineered by derivatives funding, rather than natural buying support from the spot market.

Specifically, the forced short covering (short squeeze) in the futures market temporarily pushed prices higher, but this momentum was extremely fragile. Glassnode warns that once this mechanical buying force diminishes, prices are highly likely to reverse sharply. More concerning is that the “supply clusters” accumulated by long-term holders near the cycle highs have repeatedly suppressed rebounds, forming an invisible ceiling.

Is this a bear market rebound or the beginning of a new bull run?

Analysis firm CryptoQuant’s stance is more cautious. They believe that the trend since late November resembles a typical “bear market rebound,” rather than the start of a new bull phase. The key indicator is the 365-day moving average (around $101,000), which has historically been regarded as the “bull-bear dividing line”—Bitcoin is still firmly below this critical level.

CryptoQuant’s report emphasizes that, although recent demand has slightly improved, the overall structure has not undergone substantial change. Capital inflows into the US Bitcoin spot ETF remain weak, and spot demand continues to shrink. These signs all point to the market still being in a weak state.

Early signs of bottoming out, but investors should tread carefully

However, the market is not entirely bleak. Glassnode has observed several potential positive signals: compared to a few months ago, the selling speed of long-term holders has significantly slowed; spot funds on major exchanges like Binance have shifted to buyer dominance; and selling pressure from Coinbase is easing. These signs suggest that the market may be brewing a bottoming process.

The options market also reflects the cautious mood of market participants. Although implied volatility remains low, long-term contracts generally include downside protection clauses, indicating that investors are still defensive.

Both Glassnode and CryptoQuant agree: before sustained spot demand truly returns, Bitcoin will remain highly sensitive to changes in leverage and liquidity. The liquidation storm has issued a warning, and investors need to stay alert, constantly guarding against the next wave of sharp volatility.