Bitcoin experienced a sharp sell-off on Monday, plunging 4.8% to just above $93,000, erasing over half of last week’s $8,100 rally. The drop triggered $550 million in liquidations, with 70% of the liquidations stemming from leveraged long positions.

Market Dynamics Behind Bitcoin’s Dip

According to Ryan McMillin, Chief Investment Officer at Merkle Tree Capital, two primary factors contributed to Bitcoin’s pullback:

1. Sell Walls Near $100K: A significant sell wall just below the psychological $100,000 mark led to traders locking in profits, especially following the asset’s explosive run-up after President-elect Donald Trump’s victory.
2. Liquidation of Leveraged Longs: Market makers may have intentionally driven prices down to force liquidations of highly leveraged positions, creating liquidity opportunities.

“Market makers often chase over-leveraged positions, and Monday’s liquidations are a classic example,” McMillin told Decrypt.

Looking Ahead: $100K Retest in Sight?

Despite the downturn, analysts remain optimistic. McMillin suggested that the lack of liquidity below $92,000 could establish it as a temporary floor. “We expect the market to go and retest $100,000 before the week is out,” he said.

Nick Forster, founder of DeFi derivatives protocol Derive, echoed this sentiment, calling pullbacks like Monday’s a normal occurrence in bull markets. “Structural tailwinds for Bitcoin remain strong, driven by interest rate cuts and improved regulatory frameworks,” Forster explained.

Broader Market Impact

The sell-off also affected other top cryptocurrencies. Dogecoin (DOGE) recorded the steepest drop, falling 9.5% to $0.38, according to CoinGecko data.

As Bitcoin approaches the key $100,000 threshold again, market participants remain focused on liquidity levels and structural factors driving the market.