Altcoin Carnage Pushes XRP and Dogecoin Down by 12%, Resulting in the Highest Bullish Liquidation in Nearly Three Years.

Cryptocurrencies, particularly major tokens and midcap assets, suffered significant losses on Tuesday, with one of the worst trading days in recent months. This decline occurred during early Asian trading hours, while Bitcoin (BTC) remained relatively steady.

XRP, Dogecoin (DOGE), and Cardano’s ADA dropped by up to 15% over the past 24 hours, as selling pressure began late in U.S. hours and intensified into the Asian session. Bitcoin saw a 3% decrease, while Ether (ETH) and Solana’s SOL dropped 7%. Meanwhile, Tron’s TRX almost erased all of last week’s gains, plummeting by 17%.

The overall market capitalization fell by 6.5%, marking the biggest drop since October, while the CoinDesk 20 (CD20) index slid by 7%.

Though no clear catalyst for the selloff emerged, the market turbulence coincided with Google’s announcement regarding its new Willow quantum computing chip and its associated benchmark tests. This development raised concerns about the potential impact on crypto privacy and security.

Market analysts and traders had previously warned of short-term selling pressure after the strong November rally, noting the possibility of an overheated market, as CoinDesk reported earlier on Monday.

The downturn resulted in more than $1.5 billion in long positions being liquidated, marking the largest such event since 2021. Altcoin futures under the “Others” category tracked by CoinGlass saw the most significant losses, with $560 million liquidated. Dogecoin and XRP futures each accounted for losses exceeding $70 million.

Some market observers noted that the selling pressure initially emerged from U.S.-listed Coinbase, which had an unusual impact on XRP’s market movement. Metrics suggested that traders were over-leveraged, contributing to the selling frenzy.

“Something definitely strange occurred,” commented widely followed quant trader @ltrd_ on X. “We saw a cascade of large sell orders on a mature market, causing a 5% drop. While we don’t know exactly what happened, it’s unusual.”

“These sell orders don’t look normal… perhaps a major player was forced to sell as if there was no tomorrow,” they added.

Liquidations happen when exchanges close leveraged positions due to a trader’s failure to meet margin requirements. Large-scale liquidations can signal extreme market conditions, such as panic buying or selling. A series of liquidations could indicate a market turning point, where an overreaction to market sentiment may lead to a price reversal.