Significant Volatility! Trading Market Executives Attribute it to Institutions Selling $500 Million Worth of Bitcoin

On December 3rd (Friday), according to the Binance BTC/USDT data, Bitcoin dropped from the 57K level to 51K, with a single-day decline of over 5%. The following day (12/4) was even worse, with the high and low points ranging from 53K to 42K, experiencing a single-day decline of over 8%. At the time of writing, the price of Bitcoin is at the 49K level. There has been no definitive explanation for the sudden drop in the market.

On Friday, December 3, according to Binance BTC/USDT data, Bitcoin fell from a high of 57K to a low of 51K, a decrease of over 5% in a single day. The situation worsened on December 4, with the range between 53K and 42K, marking a more than 8% drop in a single day. At the time of writing, Bitcoin was trading around the 49K level. The market has not provided a definitive explanation for the sudden decline.

Some attribute the drop to a slowdown in quantitative easing policies, prompting a shift from speculative to conservative market behavior. There are opinions suggesting that there will be mixed sentiments leading up to the Federal Open Market Committee (FOMC) meeting on December 14th and 15th. Others believe that it may be due to the natural volatility cycle, with such fluctuations being a win-win situation for market participants, and the most capable and motivated drivers are likely to be the exchanges.

和山寨币，杠杆效益比我估计至少是1:15，衍生品极大放大对现货操纵的动力。

3. 经常性的大波动性，对于交易所、交易员、散户来说都是一种共赢。

从市场参与者来说，交易所最有动力去创造或助推这样的大波动。

这种波动本身也不一定有具体原因，和牛熊也无关，只是时间到了，杠杆到了，该浪一回了

— Mindao (@mindaoyang) December 5, 2021

Unnamed sources interviewed by The Block indicated another reason. They mentioned that on Friday morning U.S. time, an institution sold over $500 million worth of Bitcoin to realize profits. This selling activity triggered significant liquidations in the derivatives market, further exacerbating the downturn. According to Larry Cermak, Director of Research at The Block, when the price dropped from 51K to 42K, over $13 billion in long positions were liquidated. Within an hour, the total open interest in the derivatives market decreased from $21.6 billion to $16.7 billion.

Regardless of the reasons, the common point among various explanations is that such significant pullbacks are not uncommon in the crypto market.