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Major tokens and midcaps registered one of their worst days in recent months with a sharp drop during early Asian hours on Tuesday, even as bitcoin (BTC) was relatively little changed. XRP, dogecoin (DOGE) and Cardano’s ADA fell as much as 15% in the past 24 hours, data shows, as selling pressure mounted in late U.S. hours and amplified in early Asian time. Bitcoin dropped 3%, while ether (ETH) and Solana’s SOL fell 7%, as tron's TRX nearly reversed all of last week’s gains with a 17% haircut. Overall market capitalization dropped by 6.5%, largest drop since October, while the broad-based CoinDesk 20 (CD20) index slumped 7%. No immediate reason spurred the selling pressure, but it came on the back of internet giant Google announcing benchmark tests on its new Willow quantum computing chip — which led to market concerns about what it meant for crypto privacy and wallet security. Market analysts and traders warned of short-term selling pressure amid an overheated market after a November rally, as CoinDesk reported earlier Monday. The fall led to over $1.5 billion in longs, or bullish bets, being liquidated, the highest such figure since 2021. Altcoin futures tracked under “Others” by data provider CoinGlass led market losses at $560 million in an unusual move, with doge and XRP futures losing more than $70 million each.

Some market watchers pointed out that the selling pressure first rose from U.S.-listed Coinbase, with an unusual market impact on XRP and metrics indicating that traders were over-leveraged. “Something absolutely strange happened,” widely followed quant trader @ltrd_ said on X. “On a large, relatively mature market, we witnessed a cascade of big sell orders that caused the market to drop by over 5%. We don't know exactly what happened, but it's certainly unusual.” “You can see that those sell orders are not normal…Perhaps a major player was forced to sell as if there were no tomorrow,” they added.

A liquidation occurs when an exchange forcefully closes a trader's leveraged position due to the trader's inability to meet the margin requirements. Large-scale liquidations can indicate market extremes, like panic selling or buying. A cascade of liquidations might suggest a market turning point, where a price reversal could be imminent due to an overreaction in market sentiment.