Bitcoin Plunges $6K in Minutes, Recovers to $98K as Crypto Liquidations Top $1 Billion

On Thursday, the price of the world’s largest crypto plunged to its lowest level in over a week within minutes, sparking over $1 billion in digital asset liquidations before sharply rebounding.

Starting at 5:26 pm ET, Bitcoin’s price plunged 6.3% to a low of $92,000 within three minutes. It then quickly rebounded above $97,600 before dipping another 1%, according to Coinbase data.

Despite slipping 1.7% on the day to $97,100, the asset is still up over 39% in the past 30 days, driven by bullish enthusiasm surrounding President-elect Donald Trump.

The move triggered more than $1.07 billion in liquidations across the market, with roughly 80%—or $817 million—coming from positions betting on higher prices, CoinGlass data shows.

Bitcoin long liquidations, meanwhile, have spiked to more than $390 million over the past four hours. 

According to Pratik Kala, portfolio manager at Apollo Crypto, the drop was expected as funding rates had risen sharply, signaling an overheated market.

“Lots of people longed on the $100,000 breakout with leverage and got flushed,” Kala told Decrypt.

Funding rates are payments between traders holding long and short positions in perpetual futures contracts.

These payments help keep the contract price in line with the underlying asset’s price.

When funding rates are high, it indicates more traders are betting heavily on one side—typically longs.

With Thursday’s move, high funding rates signaled that many traders were over-leveraged on the belief that prices would continue rising. When the market moved against them, forced liquidations caused a sharp price drop.

Analysts previously told Decrypt that market participants should be mindful of “profit taking” along the way, encouraging them to remember that assets rarely rise in a straight line “forever.”

It follows a surprise jump in Bitcoin above the vaunted $100,000 level late Wednesday evening, with the asset rising to record highs above $103,000. 

The recent surge in Bitcoin and other crypto prices has been widely linked to Trump’s re-election, driven by his pro-crypto campaign and industry-focused promises. 

On Thursday, he claimed credit for Bitcoin surpassing the $100,000 milestone, which followed closely on the heels of his pick for the Securities and Exchange Commission’s next Chairman.

Trump has tapped Paul Atkins, a former SEC commissioner, to lead the regulatory agency beginning next year. Atkins is viewed as a more friendly ally for the crypto industry than the current Chairman, Gary Gensler.

Editor’s note: Adds comments from Kala on funding rates.