Bitcoin Price at Risk as $957M Crypto Liquidations Hit $78K
Key Summary
A massive $957.77 million wave of crypto liquidations has hit the markets, with Bitcoin's price at risk of falling to $78K. The liquidations, triggered by hotter-than-expected inflation and fears about Federal Reserve policy, have pushed the price downward near $81K, threatening a fresh selloff. Despite historical performance showing that the price can recover after higher-than-expected core CPI, the current price level of $81K still represents vulnerability.
Background
On the 15th of October, the crypto markets were hit by a $957.77 million wave of liquidations. Notably, long positions accounted for 91.7% of the total, reflecting widespread forced selling. Over the last 24 hours, $878.07 million in leveraged longs were wiped out amid concerns over hotter-than-expected inflation and fears about Federal Reserve policy.
Analysis
The $203.01 million in liquidation has put Bitcoin's market structure at risk and pushed the price downward near $81K. The previous support area for leveraged buyers was at $83,000. However, Bitcoin broke below this level and failed to return above the upper end of the range at $84,300-$84,500.
Outlook
As such, if a strong reversal does occur, it would imply that buyers have absorbed nearly all the selling pressure and could lead to a move upward toward $82,500. Instead, if a sell-off occurs, it could trigger additional stop-loss selling and potentially drop prices down to levels as low as $78,000, further extending the effects of the recent liquidation.
Historical Context
Historical performance of Bitcoin provides some optimism, though. In an email to AMBCrypto, Matt Mena, Senior Research Strategist at 21Shares, stated that the average daily return for Bitcoin seven days after higher-than-expected core CPI since 2023 was 1.21%. Mena believes that the price of Bitcoin can reach back up to $85,000 and possibly even $90,000.
Conclusion
September’s higher-than-expected CPI reading has created a fresh challenge for investors who remain optimistic about Bitcoin’s near-term outlook, particularly those expecting monetary easing in the coming months.