Bitcoin’s price moves have always been the talk of the town for traders and investors. And these latest ones are no different. As the BTC price falls below $66,000, long liquidation risk becomes a real concern for many in the crypto community.
The Current State of Bitcoin
Bitcoin has had a tough time holding support at $66,000. This recent drop is just one of many failed attempts to secure this crucial level in recent weeks. According to popular trader Skew, about 12,000 BTC — or $800 million — in open interest has been cleared out by the latest market moves.
What Caused The Price Drop?
Here are some factors that contributed to this increase in selling pressure:
- Grayscale Bitcoin Trust (GBTC) Changes: On July 29th, Grayscale announced a new Bitcoin Mini Trust and moved 10% of GBTC’s bitcoin holdings into it.
- US Bitcoin ETFs: With $205 million outflows leading from BlackRock iShares Bitcoin Trust (IBIT), there has been a general decrease among US spot bitcoin ETFs which only adds fuel to the fire.
Key Levels To Watch
Potential For Long Liquidations
DecenTrader suggests that if bitcoin drops to $63,600, it could start with liquidating longs. This means we are sitting on thin ice as more and more longs come close to getting wiped out with each tick down in market price.
Short Liquidations & Market Behavior
- Short Liquidations: Once downside liquidity is soaked up, expect bitcoin to rally towards the short liquidation level around the $72k mark.
- Investor Sentiment: There seems little concern about speculators losing their nerve according to onchain analytics from CryptoQuant; short-term holder realized cap indicates accumulation, not impulse selling.
Conclusion
The danger zone for longs remains below $64k as bitcoin hangs around critical levels. Traders need to be watching these levels like a hawk. Whether BTC can stabilize or plunge further into long liquidation territory is yet to be seen.
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