Analysis: Crypto crash driven by market liquidity issues, not macro factors

The sharp decline in the cryptocurrency market last Saturday was directly caused by contracting market liquidity and large-scale liquidations rather than macroeconomic variables, according to an analysis by trading platform The Kobeissi Letter. The platform stated on X that the push below $79,000 for Bitcoin was not due to geopolitical issues or Federal Reserve policy, but was purely a liquidity problem. It added that more than three major forced liquidations occurred between Friday and Saturday, with the total volume exceeding $1.3 billion. This accumulation of excessive leveraged positions in a low-liquidity environment led to an "air pocket" phenomenon, where the order book thinned out rapidly. The analysis also noted that volatility increased as investor sentiment swung wildly between optimism and pessimism.