Bitcoin’s Post-CPI Whipsaw Liquidates Over $500M Again
Analysis
Price Impact
HighBitcoin experienced a significant whipsaw after soft cpi data, initially rallying towards $90,000 but then rapidly reversing, triggering over $500 million in crypto liquidations, with $202 million specifically from btc longs.
Trustworthiness
HighThe analysis is based on multiple on-chain data providers (coinglass, velo, coinalyze, coingecko) and prediction markets (myriad), providing a well-rounded and data-backed perspective on market movements and sentiment.
Price Direction
NeutralWhile there was a brief bullish reaction to cpi, the rapid reversal driven by derivatives profit-taking and the ongoing threat from the bank of japan's rate hike impacting the yen carry trade suggest continued volatility. elevated leverage and shrinking holiday liquidity point to potential instability, despite some underlying demand in the $81,000-$85,000 range and long-term optimism from some traders.
Time Effect
ShortThe article highlights immediate post-cpi volatility and liquidations over the past 24 hours. the impending holiday season is also expected to amplify volatility due to shrinking liquidity and rebalancing, indicating short-term turbulent conditions.
Original Article:
Article Content:
In brief Bitcoin's rally after soft CPI data reversed rapidly, triggering over $500 million in liquidations from leveraged long positions. The sell-off was driven by derivatives traders taking profits, unlike prior moves led by spot sellers, per on-chain data. The Bank of Japan's first rate hike in 30 years threatens the yen carry trade, a key source of global market liquidity. Decrypt’s Art, Fashion, and Entertainment Hub. Discover SCENE Bitcoin whipsawed again after Thursday’s soft inflation report signaled a recovery, triggering over $500 million in crypto liquidations. With headline and core inflation coming in at 2.7% and 2.6%, respectively, below 3% forecasts, the crypto market outlook seemed bullish. Bitcoin even came close to revisiting $90,000, but sellers stepped up again, undoing the gains in a few hours. Per CoinGlass data , the crypto market saw $575 million in liquidations over the past 24 hours, of which $368 million were long positions. Bitcoin accounted for $202 million of the liquidated positions, with $119 million of longs liquidated. Unlike the Wednesday whipsaw , where spot investors drove the price lower, the recent reversal was also driven by profit-taking from derivatives investors, per Velo data . Despite the washout, the $85,000 to $81,000 range has been a good source of demand. Bitcoin is up nearly 1% over the past 24 hours and is currently trading at around $88,100, according to CoinGecko data . Traders on prediction market Myriad , owned by Decrypt 's parent company Dastan, remain optimistic, placing a 61% chance on Bitcoin's next move taking it to $100,000 rather than $69,000. Pressure on the yen carry trade The Bank of Japan raised its interest rate by a quarter point on Friday, ending a 30-year low rate regime, likely adding pressure on crypto and other risk assets, according to a previous Decrypt report . The historic decision puts pressure on the carry trade that has been ongoing for decades. As a result, the subsequent unwinding of the carry trade post-rate hike will halt the liquidity that has greased risk assets for years. Regardless of the catalyst, leverage remains elevated in the crypto ecosystem. Reflecting this, there have been four days in December when total crypto market liquidations have surpassed $500 million. A closer look at liquidation data shows that optimistic investors’ long positions have been a major contributor to the total liquidations, per Coinalyze . With the holidays fast approaching, volatility is likely to ramp up as liquidity shrinks and investors rebalance portfolios. The reduced spot demand and defensive positioning among futures and options traders will only amplify these conditions. Daily Debrief Newsletter Start every day with the top news stories right now, plus original features, a podcast, videos and more. Your Email Get it! Get it!