On Tuesday, the crypto market experienced a sharp downturn, marking one of the worst trading days in recent months, with significant losses for major and midcap tokens. Bitcoin (BTC), however, remained relatively stable compared to the broader market.
XRP, Dogecoin (DOGE), and Cardano’s ADA saw declines of up to 15% in the last 24 hours, with selling pressure mounting during the late U.S. trading hours and intensifying into the early Asian session. Bitcoin dropped 3%, while Ether (ETH) and Solana (SOL) fell by 7%. Tron’s TRX was hit the hardest, plunging 17% and nearly reversing all of last week’s gains.
The total market capitalization of cryptocurrencies dropped 6.5%, the largest drop since October, while the CoinDesk 20 (CD20) index saw a decline of 7%.
While no single event triggered the sell-off, the timing coincided with Google’s announcement about the benchmark tests for its Willow quantum computing chip, raising concerns within the crypto community about potential risks to crypto privacy and wallet security.
Earlier warnings from market analysts about short-term selling pressure following November’s rally seemed to be coming to fruition, as reported by CoinDesk earlier on Monday.
The market slide resulted in over $1.5 billion in long positions being liquidated, marking the largest liquidation figure since 2021. Altcoin futures under the “Others” category tracked by CoinGlass experienced significant losses, with $560 million liquidated. Dogecoin and XRP futures each saw liquidations surpassing $70 million.
Market analysts pointed out that the selling pressure appeared to originate from Coinbase, where XRP saw an unusual market impact. The data also indicated that traders were over-leveraged, which contributed to the sharp drop in prices.
“Something out of the ordinary occurred,” said well-known quant trader @ltrd_ on X. “A cascade of large sell orders triggered a 5% drop in the market. It’s unusual, and we don’t know exactly what caused it.”
“These sell orders are not typical,” they continued. “It seems like a major player may have been forced to sell aggressively.”
Liquidations happen when an exchange closes a trader’s leveraged position due to a failure to meet margin requirements. Large-scale liquidations can indicate extreme market conditions, such as panic buying or selling. A series of liquidations could signal a market turning point, where a reversal in price may occur due to overreaction in sentiment.
