Another bloodbath! Bitcoin fell below the 85,000 mark for the first time in two months, with the size of the cryptocurrency market liquidation exceeding 1 billion US dollars.

Recently, Bitcoin seems to be "out of breath." Against the backdrop of a weakening US dollar, traders had previously shifted from cryptocurrencies to gold and silver for macro hedging. Now, Bitcoin is falling along with precious metals, appearing in a broader risk-off selling trend, once again reinforcing its role as a "high leverage beta" risk asset. On Thursday, Bitcoin price fell below the $85,000 mark for the first time in two months, dropping as much as 6.8% intra-day to a low of $83,240, the lowest level since November 21 of last year. Other digital assets saw even more dramatic declines, with Ethereum, Dogecoin, Cardano, and Solana all falling by at least 7%. As the market quickly retreated, over $1 billion worth of leveraged positions were liquidated within a short period. This sell-off continues the downtrend since early October. While tech stocks and precious metals like gold and silver had seen some rebounds recently, Bitcoin price has remained stagnant or weakened. Currently, Bitcoin has retraced over 30% from its all-time high set on October 6th. Chris Newhouse, business development manager at Ergonia, pointed out that the weak trend of the day highlights the position of crypto assets in the market, often acting as an amplifier for traditional risk assets. With tech stocks under pressure, the digital asset market further amplifies overall selling sentiment. Additionally, overleveraged long positions were cleaned out, leading to mechanical selling pressure and further straining the already fragile market. According to data from Coinglass, over the past 24 hours, the crypto market saw liquidations exceeding $1 billion, with approximately $923 million in long positions being closed and $120 million in short positions being liquidated, showing that the market volatility was mainly driven by longs being trampled. Jake Ostrovskis, head of OTC trading at Wintermute, stated that the derivatives market is currently in a defensive state. Chicago Mercantile Exchange Bitcoin futures open interest is hovering near yearly lows, while perpetual contract funding rates are near neutral, indicating limited speculative confidence and a lack of strong directional bets in the market. The decline in Bitcoin also dragged down the performance of related crypto-related stocks. Shares of digital trading platform Coinbase Global (COIN.US) and mining company MARA Holdings (MARA.US) fell by nearly 5%, while hodler company MicroStrategy (MSTR.US) plummeted by 9.6%. Analysts believe that the reversal of the yen carry trade in traditional markets is also intensifying pressure. Matt Maley, chief market strategist at Miller Tabak & Co., pointed out that the yen carry trade strategy typically involves borrowing low-interest rate yen to invest in high-yield assets for returns, and unwinding these trades often means global liquidity tightening. "Bitcoin and other cryptocurrencies are highly dependent on liquidity. They rise when liquidity is abundant and fall when it tightens," Maley said, "and the yen carry trade is one of the best indicators of systemic liquidity levels." Currently, investors are closely watching whether the $80,000 mark can become the next key support level for Bitcoin. In the backdrop of declining risk appetite, accelerating leverage liquidation, and tightening liquidity environment, the crypto market may still face greater volatility in the short term.