Bitcoin declined by 16% to $16,334

On November 26, the price of Bitcoin sharply declined by 16% to $16,334, while in the previous session, its peak at $19,484. According to data, cascading liquidations were the driving force on the massive correction.

Significantly, before the pullback, the open interest of the dominant cryptocurrency futures market reached a new record high.

Moreover, the derivatives market was overheated with buyers, causing the market to sway to one side.

A combination of two factors caused a rapid decline in Bitcoin price with a spike in futures trading volume.

Similar to the March 12 crash, over a billion-dollar worth of futures contracts were liquidated. According to Skew, the Chicago Merchantile Exchange witnessed $1.8 billion in volume, which is its record.

Significantly, inflows into exchanges spiked as the dominant cryptocurrency’s price started to decline.

According to the CEO of CryptoQuant, Ki-Young Ju, the All Exchanges Inflow Mean indicator showed the selling pressuring coming from whales.

First, the sell-off from whales caused the Bitcoin to fall to near $18,000. However, as there were likely many overleveraged long contracts, it led to a huge long squeeze.

During the several hours, the world’s largest cryptocurrency dropped to $16,334, posting a crash like in March. Data reveals that approximately 1.9 billion worth of futures contracts were liquidated on the day.

Additionally, Glassnode announced that an on-chain market analysis firm, Binance Futures witnessed the largest spikes in liquidations of $425 million during two hours.

Bitcoin near-term scenario

Significantly, there are three potential scenarios for BTC in the near term:

1. Bitcoin could rebound relatively quickly to $18,000.
2. Bitcoin could resume falling to the next major support area at $13,700.
3. Bitcoin could range, allowing the derivatives market to stabilize.

Glassnode found that the number of Bitcoin whales has reached an all-time high, which suggests that there is still sizeable potential selling pressure that could come from high-net-worth investors. They announced that Bitcoin whales had hit a new all-time high after over four years.