Bitcoin experienced a dramatic sell-off on Sunday after struggling to break through a pivotal resistance level near $91,000. Within hours, the leading cryptocurrency plummeted nearly 6%, finding a temporary floor at $85,800 on Coingecko. This sharp decline came on the heels of a hauntingly brief positive weekly close, marking the first glimmer of hope in a month plagued by four consecutive weeks of losses. What many had hoped would signal a bullish reversal instead evolved into a rapid and troubling downturn.
Liquidations Send Shockwaves
Data from CoinGlass indicates that over 180,000 traders fell victim to the market’s wrath in a mere 24 hours, with total liquidations soaring to almost $540 million. Notably, nearly 90% of these liquidations stemmed from long positions predominantly in Bitcoin and Ether.
Market experts suggest that a sudden spike in selling volume ignited a chain reaction. As margin positions were forcibly closed, the resulting panic accentuated the price drop, illustrating the precarious nature of the current trading environment. Some analysts have pointed to specific technical factors that may have compounded the issue. The CME gap was cited, with reports indicating that approximately $400 million in long positions were unwound, effectively flushing out downside liquidity in what has been characterized as a necessary market clean-up.
Crypto’s liquidity issue:
As seen countless times this year, Friday night and Sunday night often come with LARGE crypto moves.
Just now, we saw Bitcoin fall -$4,000 in a matter of minutes without ANY news at all.
Why? Liquidity is thin.
Then, add this to the fact that… https://t.co/BTRNPV8Y5a
— The Kobeissi Letter (@KobeissiLetter) December 1, 2025
The Kobeissi Letter noted that the abrupt downturn occurred without any clear news catalyst. Observations made throughout the year indicate a troubling pattern wherein significant market movements often coincide with trading activity late on Fridays and Sundays.
Macro Influences and Increasing Volatility
The broader economic landscape has also contributed to shaken investor confidence. Heightened speculation around potential shifts in Federal Reserve policy has led to increased pressure on risk assets such as Bitcoin, particularly with talks of rising interest rates.
Throughout the trading day, Bitcoin fluctuated between a low of $85,400 and a high of $90,600, underscoring the intense volatility characterizing the market. The Average True Range (ATR) recently registered at 4,423, signaling pronounced daily fluctuations, while the Relative Strength Index (RSI) hovered slightly above 38, edging closer to oversold territory.
November proved particularly harsh for Bitcoin, as reports reveal the digital asset concluded the month down 18%, marking its most significant decline for that month since 2018, when it recorded an even steeper drop of 35%. Nonetheless, Bitcoin has managed to gain 10% year-to-date, allowing some traders to maintain an optimistic outlook, suggesting that the current pullback may be more a mechanical adjustment than a fundamental crisis.
Market Sentiment and Future Outlook
As highlighted by analysts and reports from CoinGlass, the preponderance of recent liquidations can be traced back to long positions, intensifying the scope of the decline. While some experts believe this event marks a structural shakeup driven by the unwinding of overcrowded positions, others maintain that it serves as a necessary correction promoting long-term growth.
Key figures like Binance’s CEO Richard Teng have issued reminders about the importance of diversification amidst turbulent markets. The overarching macroeconomic environment remains a variable of central importance: a hawkish stance from the Federal Reserve could perpetuate selling pressure, whereas a dovish pivot might help stabilize prices.
As traders keep a watchful eye on liquidity levels, open interest, and the resolution of significant long squeezes, these elements are poised to influence the immediate direction of the cryptocurrency market.
Featured image from Pexels, chart from TradingView
