Crypto Liquidations Reach $1,3 Billion as Bitcoin Dips Below $104K

The Bitcoin price has recently undergone a significant decline and is now 17% off its all-time high. On Tuesday, the price dropped below $104.000, triggering a wave of liquidations within the crypto market. This sharp decline was made possible by traders scaling back their risk appetite, leading to massive liquidations of both long and short positions.

Over the past 24 hours, more than $1,36 billion worth of positions were liquidated, with Bitcoin which was responsible for approximately $377 million of that total. While this was unfolding, there was a notable liquidation of a long position worth nearly $48 million on the HTX trading platform. These types of liquidations can indicate market capitulation, sometimes leading to a temporary bottom.

Proven signals in the futures market

What also worries us is the 4% drop in open interest (OI) on Bitcoin futures across all exchanges. This indicates a decline in market participation, which could lead to less optimistic sentiment among investors. For reference, a previous 10% drop in OI in September coincided with a corresponding 8% drop in the Bitcoin price. If the shifts in open interest continue to decline, we may need to prepare for more volatility and lower price levels.

$100.000 as a crucial support point for Bitcoin

With the recent drop below $105.000, the question remains: where will Bitcoin find support? Analysts suggest that $100.000 will be crucial in the near future. Trader Jelle sees the need to push the price back above $105.000-$107.000 to avoid an even deeper correction toward $100.000. We are in a critical phase where the market must determine whether we are in for a further price decline or whether a recovery will occur.

A daily close below the most recent low of $105.300 would open the door for another drop below the psychologically important $100.000 level, which would have a significant psychological impact for many traders and investors.

Frequently Asked Questions

What are the main factors contributing to Bitcoin's recent decline?
Bitcoin's recent decline is the result of a combination of excessive liquidations, risk aversion among traders, and a decline in futures open interest. Sometimes, excessive volatility leads to closing positions, further depressing the price.

Why is $100.000 so important for Bitcoin?
$100.000 serves as a crucial support level, both psychologically and technically. A break below this value can create uncertainty and potentially lead to a much deeper correction in the price.

How can investors protect themselves against current volatility?
Investing in Bitcoin and other cryptocurrencies requires thorough risk analysis and a good understanding of market movements. It's important to consider stop-loss orders and carefully manage position size, especially in uncertain market conditions.