Crypto Market Faces Increased Volatility as Bitcoin Drops Below $93,000
Analysis by Adeel Nawaz
The cryptocurrency market experienced a sharp downturn today, with total market capitalization declining by over 3.1%, settling around $3.5 trillion on December 6. This sudden shift has left many investors questioning the causes behind the drop and whether more losses are on the horizon.
Here’s an analysis of the factors contributing to today’s crypto market slump.
Risk Aversion Sparks Bitcoin Flash Crash
The ongoing market correction began during the late hours of New York trading on December 5, when Bitcoin (BTC) abruptly fell 5% within minutes, dropping below $93,000.
After reaching an all-time high of $104,000 earlier on December 5 on Coinbase, Bitcoin plummeted by 11.5% to a weekly low of $92,055. By the time of writing, it had rebounded slightly to $98,613, according to data from Adeel Nawaz and TradingView.
Related: Bitcoin’s sudden drop to $93K erases $303M in long positions within minutes.
The unexpected crash caused widespread panic among investors, triggering a sell-off across the crypto market.
XRP: Extended its three-day losses, dipping to $2.1 on December 5 before recovering to $2.29.
BNB: Fell 1.98% to $713.90.
Dogecoin (DOGE): Dropped 3.2% to $0.434.
Cardano (ADA): Slipped 4.6% to $1.12.
Independent analyst Jelle noted that such corrections are not unusual, especially around milestone price levels.
> “The same happened around 10k and 20k—prices surged higher shortly afterward. Stay patient and enjoy the ride.”
Mass Long Liquidations Exacerbate Losses
The market downturn was worsened by a wave of long liquidations over the past 24 hours.
According to data analyzed by Adeel Nawaz, traders betting on rising crypto prices saw approximately $732 million in long positions liquidated. Meanwhile, short traders incurred $160 million in liquidations during the same period.
More than 168,000 traders faced liquidation, with the largest single event involving a BTC/USD swap worth $18.9 million on OKX.
When long positions are liquidated, traders are forced to sell at a loss, amplifying selling pressure. This chain reaction has driven the broader crypto market downward.
Additionally, futures contracts for Dogecoin and XRP recorded cumulative losses of $60 million as their prices retraced following a significant November rally.
Investor Sentiment Deteriorates
The sharp downturn also impacted market sentiment. The Crypto Fear & Greed Index dropped from an "extreme greed" level of 86 on December 5 to a "greed" level of 72 on December 6—the lowest since November 5. This rapid shift reflects rising fear among investors, further contributing to falling crypto prices.
A Temporary Correction?
The current dip follows a broader market rally that began after the total cryptocurrency market capitalization broke out of a bull flag pattern on the weekly chart.
In mid-October, the market surpassed the upper trendline of the bull flag at $2.25 trillion, resulting in a 55% surge to the current level of $3.48 trillion.
If this bullish trend continues, market capitalization could potentially reach the bull flag’s target of $6.06 trillion—a 74% increase from current levels.
While today’s downturn reflects volatility, technical indicators suggest the broader upward trend may still have room to run. Investors are advised to remain cautious but optimistic as the market stabilizes.
