Bitcoin dropped 6%, triggering $660M in liquidations, with long positions hit hardest.
Rising U.S. bond yields and labor data fueled market volatility, impacting Bitcoin’s price.
Short squeeze speculation remains as bearish sentiment dominates with 53.88% short positions.
Bitcoin’s price dropped sharply in the last 24 hours, falling below $96,000 and recording a 6% decline. The move triggered massive liquidations across cryptocurrency markets, as traders adjusted to shifting macroeconomic conditions and market sentiments. Total liquidations amounted to over $660 million, with $599.23 million attributed to long positions.
The price drop coincided with a rise in U.S. bond yields, signaling potential monetary tightening by the Federal Reserve. Further, the 10-year treasury yield climbed to 4.70%, reflecting hawkish expectations ahead of the Fed’s minutes release. Notably, rising yields typically divert capital away from riskier assets like cryptocurrencies.
Also, macroeconomic data also impacted sentiment. A report by the Labor Department showed an increase in job openings, which implies that the labor market has become more competitive. This development might add a couple of notes to inflationary tendencies and prolong the period necessary for the Fed to lower rates, affecting risk assets, like BTC.
Liquidation Frenzy
The decline sparked extensive liquidations across major exchanges. Binance alone saw a significant spike in liquidations, with cumulative long positions wiped out at multiple leverage levels. The charts indicate a significant liquidation cluster near the $96,000 level, intensifying the sell-off.
Source: Coinglass
Data revealed that 24-hour liquidations included $660.38 million in total, dominated by long positions. The short liquidations stood at $61.15 million. With this, the liquidation wave highlighted traders’ vulnerability in highly leveraged markets.
Amid the sharp decline, traders speculated on a potential short squeeze. A short squeeze occurs when rising prices force short sellers to close their positions by buying back assets. This buying pressure can temporarily push prices higher.
Bitcoin’s exchange long/short ratio shows shorts slightly dominating at 53.88%, reflecting bearish sentiment. However, cumulative short liquidation leverage remains low compared to longs, limiting the likelihood of an immediate squeeze.
Investor Sentiment
The Crypto Fear and Greed Index stood at 70, reflecting “Greed,” indicating heightened risk appetite despite the dip. Historical trends show Bitcoin often retraces during high levels of greed, aligning with the current correction.
The recent Bitcoin’s surge and retracement has made investors focus on the pattern of unreliable and unpredictable markets. Thus, taking into account that in the current year macroeconomic risks are still accumulating, and technical signals are in synergy, the dynamics of Bitcoin’s price continues to attract investors’ attention and analysis.
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