Bitcoin (BTC) fell 3% today, recording one of the sharpest intraday declines in the last 11 days. The decline occurs amid a wider pullback across the crypto market.
These sales sparked a wave of liquidation, struggling long traders the most violently. With bullish sentiment losing momentum, these investors risk seeing more losses.
Bitcoin Dip Spark Liquidation Wave
BTC has seen a consistent decline over the past few days. Today, we have extended our DIP by 3% despite the slow start of trading week.
According to Coinglass data, the downtrend has caused a major wave of long liquidation in the futures market, causing a total of $277 million over the past 24 hours.
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Crypto Market Liquidation Heatmap. Source: Coinglass
Liquidation occurs in the derivatives market when assets move against the trader's position, and due to insufficient capital, they are forced to close positions to maintain. Long liquidation occurs especially when traders betting on price increases are forced to sell assets at a low price to cover their losses.
In the case of BTC, the recent price decline has pushed many positions past the critical threshold, causing this forced sales.
There is a risk that longer positions will be liquidated, as on-chain data refers to climbing bearish strength. For example, according to Santiment, BTC trading volume has increased 90% over the past day, reaching $45 billion at press time.
BTC price/trading volume. Source: Santiment
As assets prices drop while trading volumes blow balloons in this way, sales pressure is increasing, indicating that more participants are closing their positions.
In the case of BTC, this refers to an increased risk of longer liquidation and increased distribution, as holders may be offloading in anticipation of continuous debilitation.
BTC can be dipped under cychimoku Cloud and traced to $110,000
BTC's recent DIP has pushed prices down below the cloud in Mamen, with leading spans A and B currently forming resistance at $113,797 and $115,518.
This indicator tracks the momentum of asset market trends and identifies potential support/resistance levels. When assets are traded under this cloud, demand stalls during the sale of pressure spikes, reflecting market bear pressure.
If the trend continues, BTC could fall below $111,961, potentially reaching the $110,000 region.
BTC price analysis. Source: TradingView
However, once new demand enters the market, its price could regain strength and rise to $115,892.
The sudden decline of post-Bitcoin has caused a long liquidation wave of $277 million.
