Bitcoin Futures Liquidation Forms Local Price Bottom — A Return To $65,000 Inevitable?
05 Oktober 2024 - 9:00PM
NEWSBTC
The price of Bitcoin hasn’t quite started the month as widely
expected, falling to around the $60,000 mark on Thursday, October
3rd. This bearish pressure is believed to have been triggered by
the escalating tension in the Middle East after Iran fired missiles
into Israel. However, the premier cryptocurrency seems to be making
a turnaround to close the week, bouncing back above $62,000 on
Friday. The latest on-chain observation shows that this latest
recovery seen with the Bitcoin price is connected to dwindling
selling pressure. 4,000 Long Positions Liquidated On October 1
— What Next? In a new Quicktake post on the CryptoQuant
platform, an analyst with the pseudonym Caueconomy discussed the
impact of the recent liquidations of long positions in the Bitcoin
futures market. According to the analyst, the ongoing liquidations
have reduced the bearish pressure on the Bitcoin price. Related
Reading: Meme Coin Trader Misses A $25 Million Payout After Selling
HIPPO On Sui Network Early For context, futures allow investors to
speculate on the price of a specific asset (Bitcoin, in this
scenario). A long position is taken when a BTC trader buys a
futures contract, predicting the coin’s price to rise at a later
date. The trader incurs a loss when the asset’s price falls below
the purchase price specified in the futures contract. According to
data from CryptoQuant, more than 4,000 long positions were
liquidated following the latest price decline on Tuesday, October
1, representing the second-largest liquidation event so far this
year. Although liquidations reflect significant selling activity
and investor losses, they can also signal pivotal shifts in market
sentiment. The CryptoQuant analyst noted that periods of severe
losses and market liquidations often lead to the formation of local
price bottoms. “During significant price declines, the number of
contracts purchased tends to drop sharply due to liquidations,
which reduces selling pressure in the market,” Caueconomy said.
Furthermore, the analyst mentioned that the price of Bitcoin might
be gearing up for a short-term recovery due to the reduced selling
pressure. However, Caueconomy highlighted the importance of
increasing buying strength from the investors for the Bitcoin price
to make a full comeback. Bitcoin Price At A Glance It does appear
like the price of Bitcoin established a local bottom around the
psychological $60,000 level before a pivotal rebound. As of this
writing, the premier cryptocurrency trades around the $62,000 mark,
reflecting an over 2.5% increase in the past day. Related Reading:
FET At Risk Of Further Decline? RSI Signals Sustained Bearish
Pressure However, this single-day performance has not been enough
to wipe Bitcoin’s 5% price decline over the past week. With selling
pressure dropping and the positive price history in October,
though, it seems like only a matter of time before the flagship
cryptocurrency returns to $65,000. Featured image created by
Dall.E, chart from TradingView
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