The Dreadful Crash on September 12th: Bitcoin Plunges, Crypto Market Sinks in a Sea of Blood

The cryptocurrency market witnessed a catastrophic collapse on December 9, 2024, with Bitcoin and Ethereum leading a strong recession. The event wiped out billions of dollars in market value and caused shockwaves in the cryptocurrency community. The combination of several important factors contributed to this collapse, creating a "perfect storm" that shook the market. Here is a detailed analysis:

1. Excessive leverage and liquidation The collapse was fueled by the liquidation of over $1.7 billion in leveraged positions within 24 hours. Bitcoin, which had been trading near all-time highs, dropped below $94,000, while Ethereum decreased by 8%. These liquidations triggered a ripple effect: Buy and sell positions are abruptly closed when the stop loss level is reached. The market sell-off intensifies as prices plummet, creating a vicious circle. Leverage has long been a double-edged sword in cryptocurrency trading. While it amplifies profits in a rising market, it also magnifies losses in a downturn, as seen in this event.
2. Fear of quantum computers Google's announcement of the advanced quantum chip "Willow" has added another layer of instability. Although this technology does not pose an immediate threat, speculation about its ability to break the existing encryption algorithms has made investors worried. Cryptocurrencies such as Bitcoin rely heavily on strong cryptographic security. News of a breakthrough in quantum computing has raised concerns about future vulnerabilities. Even speculative threats can shake markets that rely heavily on investor confidence.
3. Selling Bitcoin by the government The Royal Government of Bhutan has shocked the market by selling 406 Bitcoins from its treasury, worth about 40 million dollars. This decision was made during a period of high volatility, which has added significant downward pressure on the price of Bitcoin. The government's sale of Bitcoin may cause asymmetric negative impacts as it signals the possibility of future selling by other holding organizations. This move recalls similar sell-offs in the past, leading to major price corrections. Bhutan's actions not only increase market supply but also raise concerns among investors about the risk of sell-offs from government organizations or reserves.
4. The market trend is broader and the cycle is before the split The recession also fits into a larger historical market model. Bitcoin often goes through cycles of retreat and consolidation ahead of the halving event. These accumulation phases typically involve significant volatility as market participants adjust their strategies. In this case, the convergence of previous corrections before halving, along with other negative factors, has amplified the severity of the collapse. Conclusion: The convergence of factors The collapse of the cryptocurrency market on December 9, 2024 is not the result of a single event, but the convergence of multiple factors: Leverage exceeded and forced liquidation.Investors are concerned about the advances in quantum computing.The government selling Bitcoin raises concerns about supply exceeding demand.Market correction is inherent in historical cycles prior to halving. This event emphasizes the importance of cautious investment in volatile markets such as cryptocurrencies. When the market stabilizes, traders and investors must overcome these challenges while still monitoring macroeconomic trends and technological developments. Whether this incident is a temporary setback or a long-term adjustment remains to be seen.