According to on-chain data, the recent decline in bitcoin prices has been mainly driven by forced liquidations in the derivatives market, rather than the cash market sell-off. The root cause is the accumulation of highly leveraged long positions in the futures market. When prices fall below key levels, these positions hit maintenance margin requirements and are forced to position squaring. Liquidation is executed with market sell orders, adding sudden selling pressure and further driving down prices.
Crucially, liquidations are not just the result of falling prices. They are amplifiers. Even a small initial decline can trigger a chain of forced selling, with one liquidation triggering the next. So this fall should be seen as a structural deleveraging event, not a collapse in fundamental demand.
Bitcoin's decline was driven by derivatives clearing
2025-12-17 03:24:50
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