Bitcoin falls to four-month low amid mass crypto liquidations

Bitcoin traders have become accustomed to sharp market fluctuations capable of wiping out their portfolios in minutes. However, even by crypto industry standards, such liquidations are becoming larger and happening more frequently.

Major liquidation events, where Bitcoin positions worth over $500 million are wiped out in a single 24-hour session, are turning into a regular feature of the market. This occurs because sharp movements repeatedly force leveraged traders to close their bets. According to Coinglass data covering 28 futures exchanges, Bitcoin liquidations exceeded the $500 million mark in 13 separate instances over the past year, including three cases where the amount exceeded $1 billion.

This pattern repeated on Friday when a drop in Bitcoin triggered the liquidation of approximately $1.3 billion in bullish crypto positions over one day, with the majority of this amount belonging to Bitcoin positions. These episodes highlight the fragility of a market that is already facing outflows from ETFs, risk-averse sentiment driven by artificial intelligence, continued declines in various tokens, and the aftermath of the recent $6 billion Binance hack.

On Friday, Bitcoin fell by 5.4% to around $67,600, marking its lowest level since August. According to Paul Howard, Senior Director at trading firm Wincent, 'these liquidations have become more common in the last 12 months compared to previous periods.' He added that many crypto investors seeking high-risk trades with high potential returns actively use leveraged bets, which lead to more intense losses under the influence of external events, including macroeconomic headlines affecting the market.

Derivatives make up about a quarter of the total trading volume in the crypto market. Alex Kuptsikevich, Chief Market Analyst at FxPro, noted that the use of derivatives has become 'normal even for investors with limited capital.' He also pointed to reduced liquidity before the start of the European trading session, as the lack of institutional money makes market direction less predictable. In his words, 'a point is reached very quickly where a cascade of stop orders begins.'

Nevertheless, some figures in the crypto industry caution against interpreting large liquidations as a sign of market instability. Fabian Dori, Chief Investment Officer at Sygnum Bank, wrote that 'this cascade is a function of leverage distribution across the market, not a verdict on the underlying asset,' noting that large liquidations have long been a characteristic of the crypto market.

Bitcoin, which has lost about 9% since Sunday, is moving toward its sixth week of decline amid a combination of factors. Rising oil prices and persistent inflation have strengthened expectations of further interest rate hikes by the Federal Reserve, while the return of Democrats to both chambers of the US Congress next year has increased expectations of closer regulatory scrutiny of the industry.

However, there is another theory in the crypto community: Bitcoin is losing out in the competition for speculative capital. The fall in AI stocks may create buying opportunities that appear more attractive to investors than cryptocurrencies. This would refute the popular argument of crypto bulls. Just a few months ago, some investors expected that any slowdown in the AI rally would direct speculative money into Bitcoin. Instead, the decline in tech stocks may give buyers an opportunity to take advantage of the dip, preferring AI stocks over cryptocurrencies.

Noel Acheson, author of the Crypto Is Macro Now newsletter, noted that 'when Bitcoin becomes a macro asset—which may have happened with ETFs—it competes with all other macro assets for this crown of risk,' referencing the appearance of spot Bitcoin funds in the US in 2024.

Mercado Bitcoin announced that a security incident occurred in one of its systems early Monday morning, the 2nd. The company operates as a Brazilian cryptocurrency exchange.

In a post made on X/Twitter, Mercado Bitcoin assured that there was no loss or data leak for clients. Consequently, the company decided to temporarily suspend both deposits and withdrawals.

The company informed that its teams are dedicated to investigating the occurrence, tracking assets, and coordinating necessary actions with competent authorities. Two hours after the initial announcement, an update was added reinforcing that clients would be kept informed through official channels.

Additionally, Mercado Bitcoin disclosed the destination addresses identified in transactions related to the incident, providing specific addresses for EVM, BTC, SOL, XLM, SOLP, and TRON, solely for identification and tracking purposes.

This incident at Mercado Bitcoin occurs just days after a major hacker attack in the cryptocurrency sector. On the previous Thursday, the 29th, Binance was attacked by North Korean hackers, as reported by the FBI and analysts, resulting in the theft of US$ 6.3 billion (equivalent to R$ 34.2 billion) in cryptocurrencies.

Following the attack, Binance, described as the world's largest cryptocurrency exchange, also temporarily suspended withdrawals. Withdrawals were partially reactivated on Sunday, the 1st. During this period, clients withdrew about US$ 4.6 billion (R$ 25 billion) and deposited US$ 1 billion (R$ 5.44 billion).

This means that clients withdrew US$ 3.64 billion (R$ 19.8 billion) more than they deposited. Binance clarified that the net withdrawn amount corresponded to 2.1% of the assets held on the platform. The company also announced that it gathered US$ 6 billion (R$ 32.64 billion) to cover the losses, using resources from its cash reserves, an insurance fund, and a reserve designated to cover security events.

Micaella Ribeiro, co-founder of IAM Brasil and expert in Information Security and Identity and Access Management, commented that the case demonstrates a significant shift in the digital threat landscape. She emphasized that an attack on an exchange does not necessarily imply that blockchain technology has been compromised, but warned that the use of cryptocurrencies carries distinct risks.

According to the expert, while the security of blockchain technology is one issue, the security of the platforms used to trade and store these assets is another. Ribeiro stressed that this type of attack underlines a worrying trend: criminals are focusing on compromising systems, devices, and identities that already had legitimate permission to perform crucial operations.

After the partial resumption of withdrawals, Binance clients moved approximately US$ 4.6 billion (equivalent to about R$ 25 billion) in crypto assets on Sunday, the 1st. Of this amount, users withdrew US$ 3.64 billion (R$ 19.8 billion) more than they deposited, totaling a deposit of US$ 1 billion (R$ 5.44 billion).

Binance itself communicated through a post on X/Twitter that the net withdrawn amount corresponded to 2.1% of the assets held on the platform.

The exchange had been the victim of the largest hacker attack recorded in the cryptocurrency sector the previous Thursday, the 29th. In this incident, criminals managed to steal US$ 6.3 billion (R$ 34.2 billion) in cryptocurrencies.

Both the FBI and analysts pointed to North Korean hackers as responsible for the attack. In response to the losses, Binance announced that it mobilized US$ 6 billion (R$ 32.64 billion) to make compensation. This resource was obtained from the exchange's treasury, a specific insurance fund, and a reserve designated to cover security events.

The attack occurred around 5 PM, Brasília time, and lasted about twenty minutes, as evidenced by transaction records analyzed by experts. Initially, Binance suspected that the intruder had accessed one of its engineers' computers. Later, the company confirmed the discovery of security vulnerabilities that were exploited by cybercriminals.

According to TRM Labs, the hackers managed to compromise the system responsible for authorizing cryptocurrency transfers. A portion of the stolen funds was in stablecoins, which are designed to maintain a stable value, functioning as a reflection of global traditional currencies, such as the US dollar.

Founded in 2017 in Shanghai, China, Binance currently has 335 million registered global users, according to its most recent annual report released in 2025. This same report indicates that the company managed approximately US$ 162.8 billion (R$ 879 billion) in digital assets.

Micaella Ribeiro, co-founder of IAM Brasil and an expert in Information Security and Identity and Access Management, commented on the event in an interview with Olhar Digital, stating that the case demonstrates a significant shift in the landscape of digital threats. She emphasized that an attack on a cryptocurrency exchange does not necessarily imply that blockchain technology has been breached.

However, Ribeiro stressed that handling cryptocurrencies carries distinct risks. She pointed out that there is a difference between the security of blockchain technology and the security of the platforms used to trade, store, or buy these assets. For the expert, this attack underscores an alarming trend: criminals are focusing on compromising systems, devices, and identities that already have valid permissions to execute crucial operations.