Today, Bitcoin experienced a big drop, with the price falling to $92,600 at one point. Although it has rebounded, it still suffered a great impact. This wave of decline was mainly due to the liquidation of long positions and the profit-taking of long-term Bitcoin holders.
Market sentiment changes quickly, and the next trend depends on whether there are buyers entering the market at low levels and whether they can support prices.
The $100,000 dream is shattered, and sellers dominate the market
Bitcoin once approached the $100,000 target, but the bulls' bets ultimately failed, and sellers gradually took the lead. The increasing market pressure caused the price of Bitcoin to fluctuate violently, falling to as low as $93,000 today, triggering a massive wave of liquidations.
According to Coinglass data, the total amount of liquidation in the crypto market reached $551 million in the past 24 hours, of which long orders accounted for $414 million and short orders accounted for $137 million. About 169,786 traders suffered losses in this round of liquidation. The largest liquidation occurred in the BTC/USDT perpetual contract on the Binance platform, with an amount of up to $4.6704 million.
Liquidation-induced sell-off: Volume surges, market goes out of control
The sell-off triggered by a large number of liquidation orders further intensified the downward pressure on the market. As the chart shows, trading volumes on centralized exchanges (CEXs) have surged significantly, especially on trading platforms offering perpetual futures trading. A large number of selling transactions caused violent fluctuations in market liquidity, especially on the main trading pairs of BTC/USD and BTC/USDT. The trading volume increased significantly, and the liquidation mechanism once caused the market to fall out of control.
In addition, Bitcoin long-term holders (LTH) have become the main source of selling pressure
In addition to longs who were forced to close their positions due to forced liquidation, long-term holders (LTH) also played an important role in the current price fluctuations.
According to Glassnode data, the LTH group has been the main seller of Bitcoin in the past 6 to 12 months. These investors usually accumulate positions in large quantities at Bitcoin's historical lows, and their cost basis is 71% lower than the current market price (about $579,000). As the price of Bitcoin rose from $74,000 to $99,000, many LTHs chose to take profits in this wave of gains and reduce their positions.
The selling behavior of LTH reflects the shift in market sentiment, especially when Bitcoin is close to its historical high, investors begin to choose to cash in some of their gains. This shows that the selling pressure in the market comes not only from the forced liquidation of leveraged funds, but also from long-term holders who have locked in profits during the long-term rise of Bitcoin.
The market is undergoing a subtle change - from long positions in the spot market to leveraged short positions
As market volatility increases, the delicate balance between buyers and sellers in financial markets is changing. Today's market movements show that the preference of funds has gradually shifted from short-term spot trading and leveraged longs to short positions.
As liquidation pressure increased, short positions increased rapidly and financing rates soared, from 0.019% to a peak of 0.04%, indicating that the market's expectations for future downward prices of Bitcoin are becoming stronger.
Bitcoin price approaches $90,000, and the market is once again facing liquidation pressure
According to the liquidation chart data, the current Bitcoin price has fallen below the key support level of $94,000, which has triggered a wave of forced selling. Some traders have shown great interest in the $90,000 price level, believing that this price level may become a new buying support area. If the Bitcoin price further drops to $90,000, the market may usher in a new round of shock consolidation.
Can bargain hunters enter the market in time?
Although the market is currently in a state of long-term frustration, many traders and investors are still optimistic about the long-term prospects of Bitcoin. Whether there is capital to enter the market in time when the price is low will determine the subsequent market trend. If there is capital to absorb Bitcoin at this time, it may ease the current selling pressure and support a rebound in Bitcoin prices.
Overall, today's Bitcoin flash crash is the result of multiple factors: not only short-term pressure caused by liquidation, but also profit-taking by long-term holders. Although market sentiment may still fluctuate in the short term, Bitcoin, as an asset, is still highly concerned by global investors and has long-term growth potential. If the market can regain confidence and bargain hunters can enter the market smoothly, Bitcoin still has a chance to rebound strongly.