Today, 17 December 2025, the cryptocurrency market saw extreme volatility in the Bitcoin price. Within just 30 minutes, the BTC price rose by about 3,300 USD, reaching a level above 90,000 USD and liquidating short positions worth 106 million USD. Then, over the following 45 minutes, it fell sharply by 3,400 USD, leading to the liquidation of long positions worth 52 million USD. This swing in sentiment caused losses for many investors and fueled discussions about market manipulation. Below we present a chart illustrating today’s volatility.
This sharp price action is no accident. It results from a combination of macroeconomic, structural and speculative factors. Analyzing market data, expert reports and discussions on platforms such as X (formerly Twitter), several key causes can be identified. Below we discuss the most important of them.
1. High Leverage and Cascading Liquidations
One of the main culprits behind today’s volatility is excessive use of financial leverage by traders. When the Bitcoin price rose rapidly, a wave of short positions (betting on a price drop) was liquidated, which further fueled the rally. However, the quick reversal triggered the liquidation of long positions (betting on a price rise), creating a domino effect. In total, positions worth more than 150 million USD were liquidated within an hour. Experts emphasize that such events are typical of high-leverage markets, where algorithms and market makers “hunt for liquidity,” deliberately triggering moves to force position closures. As one analysis noted, a “pump then dump” within less than two hours is rarely driven by news and more often by leverage being flushed out.
2. Options Expiry and Gamma Expiry
The Bitcoin market is currently “pinned” to the 85,000 USD level by options dealers, who are protecting this “strike price” ahead of contract expiry on Friday, 19 December. As much as 18.3% of all gamma (a measure of an option’s sensitivity to price changes) expires this week, which artificially limits price moves and increases volatility. The lack of spot volume restrains gains, while the “put wall” below protects against deeper declines. This puts the market in a “waiting room,” where small moves can turn into sharp swings.
3. Macroeconomic Uncertainty and Central Bank Decisions
Global macroeconomic factors play a key role. Investors fear an interest rate hike by the Bank of Japan (BOJ) scheduled for 18-19 December, which could trigger an unwinding of the yen carry trade, a strategy of borrowing cheap yen to buy risk assets such as Bitcoin. Historically, after similar BOJ decisions, BTC fell by 20-30%. In addition, upcoming US data on inflation (CPI) and the labor market are adding uncertainty about further rate cuts by the Fed. Bitcoin, as an asset sensitive to liquidity, reacts to these signals in advance by reducing risk exposure. Weakness in US technology stocks (e.g. Nvidia, Broadcom) is also spilling over into crypto, creating a “risk-off” atmosphere.
4. Crackdown on Mining in China
Another factor is a sudden regulatory action in China: mining farms in the Xinjiang province were shut down, switching off more than 400,000 mining rigs. This caused the Bitcoin network’s hashrate to drop by about 8%, forcing miners to sell BTC to cover operating costs. Such selling pressure creates real spot sales, not just speculative ones. Similar events have occurred before, but they always ended with the network adapting. However, in the short term, they increase volatility.
5. Thin Liquidity and ETF Outflows
Year-end brings lower liquidity on crypto exchanges. BTC reserves are close to cycle lows, meaning small orders cause large price moves. In addition, outflows from Bitcoin ETFs (e.g. spot BTC ETFs) point to institutional caution. Large players such as Wintermute sold BTC worth more than 1.5 billion USD as part of risk rebalancing, which strengthened downward pressure. Combined with low volume, these are ideal conditions for sharp swings.
In summary, today’s Bitcoin volatility stems from a mix of speculation, market structure and external macroeconomic pressures. Although BTC’s fundamentals remain strong (e.g. growing institutional adoption), short-term risks such as the BOJ decision or US data may prolong instability. Investors should focus on risk management, avoid high leverage and monitor key support levels (around 85,000-80,000 USD). The crypto market is known for episodes like this, but history shows that after the storm, a rebound often follows. Remember that investing in cryptocurrencies carries a high risk of losing capital.
