The cryptocurrency market pulled back on December 5 as a wave of renewed liquidations and fading futures interest pushed major tokens lower. Bitcoin, which had traded above $93,000 earlier in the week, slipped under the $90,000 mark. Several altcoins also weakened, including MYX Finance, Canton, Hyperliquid, Aerodrome Finance, Aptos, and Morpho.
The downturn arrived alongside a sharp retreat in futures market open interest. Total open interest dropped more than 4% to $127 billion, far below the peak of $225 billion reached in October.
Analysts say the ongoing retreat reflects continued efforts by traders to reduce risk after the sharp $20 billion liquidation event that hit the market on October 10. Historically, a falling open interest number has often signaled weak conviction among leveraged traders, a factor that tends to weigh on prices.
Liquidations moved sharply higher, climbing more than 75% from the previous day. Approximately $491 million worth of positions were closed out across the market, affecting more than 135,000 traders. Bitcoin accounted for $191 million of that total, while Ethereum liquidations logged $116 million. Other heavily affected tokens included Fartcoin, Solana, and XRP.
Exchange-traded funds (ETFs) offered little support. BlackRock’s iShares BTC Trust posted a sixth straight week of withdrawals, with over $2.8 billion leaving the fund. Overall flows into U.S. Bitcoin spot ETFs slowed to $59 million, which suggested a cooling interest among institutional investors who had been key drivers of demand earlier in the year.
The latest downturn comes ahead of a major options expiry event valued at more than $4.8 billion.
Contracts tied to Bitcoin worth over $3.5 billion are set to expire with a maximum pain level near $91,000. Ethereum options worth more than $700 million will also roll off, with maximum pain projected at $3,050. Such expiries often generate sharp swings both immediately before and shortly after settlement.
Another factor behind the pullback is profit-taking following Bitcoin’s rapid rise from $80,000 to above $93,000 in under two weeks.
The next major catalyst for the sector is likely to be the Fed’s interest rate decision, expected this week. Data from Polymarket shows the probability of a 0.25% cut rising to 93%, up from last week’s 50%.
While a lower policy rate is generally bullish for the crypto market, traders and companies like Bit Digital Inc. (NASDAQ: BTBT) will be watching the bank’s forward guidance closely, as any cautious tone could limit the upside in the near term.
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