A market schism emerged as spot buyers on Coinbase accumulated while shorts attacked on derivatives.
Bitcoin experienced a sharp pullback on Thursday, driven primarily by short selling, which exacerbated losses.
In the 90 minutes leading to the drop, Bitcoin slipped 1.5% from $115,000 as open interest — representing the total number of unsettled derivative contracts — climbed by 2.3%, adding over $591 million in notional value, according to Velo data.
The cumulative volume delta of perpetual futures on offshore exchanges, such as Binance and Bybit, decreased, while the spot CVD remained steady, suggesting that short perpetual sellers drove Bitcoin’s decline.
Over the next two hours, short selling intensified, prompting a 3.5% drop to $107,500 as spot sellers joined the fray. Open interest climbed 4% to add another $1.03 billion in exposure.
“Short traders are dominating in the perpetual futures markets right now, and spot demand is still in contraction based on on-chain data,” Julio Moreno, head of research at CryptoQuant, told Decrypt.
Amid the derivative-driven chaos, a key divergence emerged as spot CVD on U.S.-based exchange Coinbase remained “mostly positive,” indicating consistent buy-the-dip activity from spot investors.
The spot bid-ask delta indicator showed increased bid activity, confirming that spot buyers were absorbing the selling pressure from leveraged shorts, per CoinGlass data.
The violent price move has triggered a $724 million liquidation event in 24 hours. Long positions bore the brunt, accounting for $536 million of the total, indicating that bulls levered up, hoping for a recovery.
“The drop is due to a mix of macroeconomic uncertainty, rising geopolitical tensions, and a spike in liquidations from overleveraged positions,” Ryan Lee, chief analyst at universal exchange Bitget, told Decrypt.
The recovery after the Black Friday event was met with “profit-taking, adding further selling pressure,” Lee noted.
Looking ahead, the crypto market is likely going to need “time to rebalance or find its footing after such a big flush-out,” Anthony Leutenegger, CEO of Aragon, told Decrypt. “As long as macro uncertainty lingers… we might expect continued volatility.”
Moreno remains bearish despite the dip-buying efforts from spot investors and believes the “odds of a rally are tilted to the downside.”
