Binance offered users the chance to lock the USD1 token at 20% annual interest—a special offer that triggered massive conversions of bitcoin into the stablecoin. As a result, many traders exchanged BTC for USD1, primarily placing market orders rather than limit orders, which reduced order book depth and caused a sharp price drop. The correction was very swift: within a minute, the BTC/USD1 pair returned to $87,000, and those who bought during the dip later profited from the recovery.
Causes of the Bitcoin Crash on December 24
A combination of special stablecoin conditions and trading settings led to a rapid liquidity redistribution, triggering the price drop. Key factors behind the decline are listed below.
- Binance's special offer to lock USD1 at 20% APR, encouraging inflows into the stablecoin.
- A wave of BTC-to-USD1 exchanges, with large volumes converted into the stablecoin.
- Insufficient market liquidity due to the dominance of market orders over limit orders.
Bitcoin Price Dynamics During the Crash
During the incident, traders mainly used market orders, which, amid a shortage of limit orders, sharply pushed the price down. Within a minute, BTC's value against USD1 bounced back to $87,000, and those who bought on the dip secured profits on the rebound. Details on the fluctuations and recovery can be found in the review Bitcoin Price on Binance: USD1 Dip and Rapid Recovery, which describes the mechanics and timeline of the event.
USD1 Market Cap Growth
Alongside trading activity, the market capitalization of the USD1 stablecoin grew, surpassing $3 billion for the first time, with a $200 million (7.5%) increase overnight on December 24. The supply growth was linked to new token issuance across several networks, affecting the coin distribution among blockchains.
- BNB Chain: over 1.9 billion USD1 concentrated on this network.
- Ethereum: USD1 volume reached 860 million on this network.
- Solana: an additional 135 million tokens were issued.
Bitcoin Price Forecast for 2026
Strategy CEO Phong Le noted in a podcast that precise forecasts are difficult, but he sees a positive outlook for 2026. He also mentioned support for the crypto market from the US presidential administration as a factor influencing the market landscape. For broader context on market forecasts and dynamics, see the year-end market overview Bitcoin Market in December 2024.
Why This Matters
If you mine with anywhere from one to a thousand devices in Russia, this case shows how quickly an external incentive (the stablecoin offer) can impact bitcoin liquidity and price on an exchange. Even brief volatility spikes can change order execution prices and affect the ability to quickly sell mined coins, especially when using market orders.
Additionally, the rise in stablecoin market cap and its distribution across networks indicate that during mass liquidity movements, liquidity can concentrate in certain blockchains and specific exchanges. This increases the risk of sudden price crashes and mass liquidations, detailed further in the review on volatility and liquidations.
What to Do?
Recommendations are based on the practices of miners with varying equipment volumes: first, review your order types—prefer limit orders for large volumes and split sales into parts to reduce market impact. Also, keep part of your proceeds in cold wallets or controlled addresses to reduce dependence on short-term exchange liquidity.
- Use limit orders and break large sales into multiple tranches.
- Maintain reserves in cold wallets or partially in stablecoins to cover expenses and interruptions.
- Monitor exchange promotions and offers, but avoid reacting solely with market orders on large volumes.
- Assess order book depth and liquidity on your chosen platform before major operations.