Bitcoin’s $100K Milestone and the $1.7 Billion Liquidation Chaos

The cheers were deafening. Bitcoin had finally done it — $100,000. On December 4, 2024, the world’s largest cryptocurrency reached an all-time high, marking a moment of triumph for traders, institutions, and retail investors alike. Social media exploded with celebrations, and FOMO swept across markets as retail investors rushed to buy in.

But as the excitement reached its peak, the foundations of the market began to crack. Within 48 hours, Bitcoin plunged below $100K, sparking $1.7 billion in liquidations — the largest such event since 2021. Altcoins suffered even steeper losses, leveraged traders were wiped out, and accusations of scams and rug pulls began to surface.

Yet, as chaos unfolded, some stood firm. MicroStrategy doubled down, purchasing even more Bitcoin, while influential voices like Cobie reassured shaken investors. The events that followed left lasting lessons about the dangers of leverage, the fragility of sentiment, and the resilience of those who see opportunity amid turmoil.

This is the story of Bitcoin’s rise, the mechanics of its crash, and the hard lessons learned in one of crypto’s most volatile moments.

The Lead-Up to $100K

Bitcoin’s climb to $100,000 wasn’t just about hype. It was fueled by months of sustained buying, speculative momentum, and macroeconomic trends that aligned to create the perfect storm.

Key Drivers Behind Bitcoin’s Rise

• Institutional Buying:
  MicroStrategy led the charge in 2024, steadily accumulating Bitcoin throughout the year. By December, the company had acquired 423,650 BTC, spending billions to solidify its position as one of the largest institutional holders. Each public announcement from CEO Michael Saylor inspired confidence among retail and institutional investors alike, reinforcing Bitcoin’s narrative as “digital gold.”
• Record ETF Inflows:
  November 2024 was a landmark month for Bitcoin ETFs, with $3.85 billion pouring into spot ETFs in a single week. These inflows brought institutional capital into the market and legitimized Bitcoin further in the eyes of traditional investors.

Source: Farside Investors

• Retail FOMO and Leverage:
  As Bitcoin inched closer to $100K, retail investors piled in, driven by fear of missing out. Many used high leverage to maximize potential gains, pushing funding rates to unsustainable levels. Speculative trading reached a fever pitch, making the market increasingly fragile.

Broader Market Context

The rally wasn’t just driven by internal factors. Global trends also played a role:

• Trump’s Re-Election: Seen as crypto-friendly, Trump’s second term fueled optimism about favorable regulatory changes in the U.S.
• Post-Pandemic Recovery: A recovering global economy created a climate ripe for speculative assets, with Bitcoin benefiting from renewed risk appetite.

Even TIME Published an article on how positive Trump winning the election is for Crypto!

By December 4, Bitcoin hit $100,000, a psychological milestone that signified the growing maturity and legitimacy of cryptocurrency. However, the market’s foundation was shaky, and it didn’t take much to spark a collapse.

The Crash: $1.7 Billion Liquidated in Hours

The unraveling began on December 5. Bitcoin dipped slightly below $100K, a move that seemed routine. But in a market built on excessive leverage, even small declines can have outsized consequences.

What Caused the Crash?

1. Profit-Taking at $100K:
   Many investors saw the milestone as an opportunity to lock in gains, creating initial selling pressure.
2. Excessive Leverage:
   Futures markets were dominated by leveraged long positions, with traders betting heavily on further price increases. As prices dipped, these positions became vulnerable to liquidation.
3. Cascading Liquidations:
   Once the price fell below certain thresholds, margin calls and automated liquidations kicked in. Each liquidation added to the selling pressure, creating a feedback loop that drove prices lower.
4. Altcoin Fallout:
   The instability wasn’t confined to Bitcoin. Major altcoins like Ethereum, Solana, and Cardano suffered declines of 5%, 6%, and 11%, respectively, compounding market panic.

The Fallout

The numbers were staggering:

• Liquidations: Over $1.7 billion in leveraged positions were wiped out, marking the largest liquidation event in years.
• Losses: Retail traders bore the brunt, with many losing entire portfolios.
• Accusations: As fear spread, accusations of scams and rug pulls circulated, further eroding trust in smaller projects and platforms.

The crash laid bare the dangers of excessive leverage and the fragility of a market driven by speculation.

The Aftermath: Who Bought the Dip?

As the dust settled, some saw the crash not as a disaster, but as an opportunity.

• MicroStrategy’s Bold Accumulation:
  On December 9, just days after the crash, MicroStrategy announced it had purchased 21,550 BTC for $2.1 billion, bringing its total holdings to 423,650 BTC. This move sent a clear message: Bitcoin’s long-term fundamentals were unchanged, and the company remained committed to its strategy.

• Cobie’s Reassurance:
  Influencer Cobie posted a lighthearted yet impactful tweet: “I have purchased a basket of coins. Some good, some bad, but all held with love in my heart no matter the quality.” His humor and optimism reminded followers that volatility is an inherent part of crypto and that resilience is key.

These moves helped stabilize sentiment, showing that while some panicked, others remained steadfast in their belief in Bitcoin’s potential.

Lessons Learned

The events of December 2024 offer critical lessons for traders and investors:

1. Leverage is a Double-Edged Sword:
   While leverage can amplify gains, it also magnifies losses. The cascading liquidations underscored the risks of excessive leverage in a volatile market.
2. Institutional Investors Add Stability:
   MicroStrategy’s continued buying highlighted the stabilizing influence of long-term institutional players during periods of volatility.
3. Market Sentiment Matters:
   Influential voices like Cobie showed how optimism and reassurance can help restore confidence during turbulent times.
4. Diversification Reduces Risk:
   Altcoins suffered steeper declines than Bitcoin, highlighting the importance of diversifying portfolios to mitigate concentrated losses.
5. Adaptability is Crucial:
   As crypto markets evolve, traders must learn to navigate new dynamics, such as institutional participation and regulatory shifts.

Total Liquidation chart, we experience the highest ever liquidation since 2021 when FTX crashed!

What’s Next for Bitcoin?

Since the crash, Bitcoin has stabilized near $97,000, and funding rates have returned to normal. Institutional inflows into Bitcoin ETFs remain strong, suggesting sustained confidence in its long-term potential.

However, the crash leaves unanswered questions:

• Will traders reduce their reliance on leverage, or will history repeat itself?
• Can institutional players continue to anchor the market during future volatility?

One thing is certain: the events of December 2024 will shape Bitcoin’s future, testing the market’s resilience and leaving lessons that no trader or investor should ignore.

Astraea is an analyst with a rich background in finance, having worked at various research firms where he gained deep insights into investments and corporate strategies. Now, he blends this expertise with a unique perspective, crafting content for those venturing in finance, tech, or crypto. For more information check out Ascendant Finance.

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A Word of Caution

Nothing in this article is financial advice. This was written purely for entertainment purposes, and we don’t hold or own any of the coins mentioned. If you’re tempted to jump into the meme coin frenzy, remember to do your own research — or at least check if the developer is live-streaming from a dog cage or toilet first.