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Bitcoin ‘Shake-Out’ Sents Price From $102K To $92K – Here’s Why

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Finally, Bitcoin broke the $100,000 barrier, reaching an all-time high of $103,600. The event marked a historic moment for the cryptocurrency as investors and enthusiasts celebrated its journey to six figures. However, the euphoria was short-lived. Within hours, Bitcoin saw a sharp reversal, falling to $92,000 in a dramatic sell-off that left the market reeling.

Senior analyst Axel Adler turned to X to explain the sudden drop, citing the huge number of highly leveraged positions as the main reason. According to Adler, as the price of Bitcoin rose above $100,000, a series of liquidations were triggered, leading to a rapid correction. Leverage, a double-edged sword in cryptocurrency markets, exacerbated downward pressure as traders who had borrowed heavily were forced to exit their positions.

While the rebound has shaken the market, Bitcoin is still above critical levels, with analysts debating its next move. Some believe this pullback is a healthy reset, paving the way for a more sustainable rally. Others worry that this could signal more volatility. As BTC consolidates after this historic rally and sharp correction, all eyes are on whether it can reclaim the $100k level and hold it as support in the coming days.

The open interest in Bitcoin shows us something

Bitcoin had one of its most volatile days this cycle, falling from $103,000 to $92,000 in less than 24 hours. This sharp reversal has left many investors wondering what caused such a drastic move after the euphoria surrounding Bitcoin’s new all-time high. According to the main data From CryptoQuant analyst, Axel Adler, the sharp decline can be attributed to a major deleveraging event in the futures market.

Bitcoin open interest changes 24 hours a day Source: Axel Adler on X

Adler explained that liquidation of long positions played a crucial role in pushing the price lower. As the price of Bitcoin rose above $102,000, many traders were holding highly leveraged positions, and when the market turned against them, forced liquidations created a cascading effect.

This reduction pushed the price down from $102,000 to $90,000, as traders rushed to close their positions and cut their losses. Adler called this a necessary “shakeout,” noting that the market had been moving too smoothly for the bulls, resulting in a natural correction.

With BTC trading now lower, the next few days will be crucial in determining its direction. While the correction could be viewed as a healthy pullback, there is a risk that this could represent a local top for BTC, especially if it fails to reclaim key levels like $100k.

Investors and analysts are watching closely to see if BTC can stabilize above these levels or if there is further decline on the horizon. The volatility and rapid price swings highlight the risks inherent in Bitcoin trading, especially during this high-risk period.

Hesitation hits the market

Bitcoin is currently trading at $98,000 after yesterday’s volatile price action, rising to all-time highs before pulling back. The market is now experiencing indecision as the bulls continue to push the price to recent highs, while the bears believe it is time for a correction. This tug of war between buyers and sellers creates uncertainty in the short term.

BTC price breaks ATH and drops 10% in 24 hours
BTC price breaks ATH and drops 10% in 24 hours | source: BTCUSDT chart on TradingView

For Bitcoin to confirm the continuation of its upward trend, it must remain above the crucial $95,000 level in the coming days. If this support level holds, Bitcoin will likely retest its all-time high at $103,600, where bullish momentum remains. A successful breakout above this level could pave the way for higher price targets.

However, if Bitcoin fails to hold above the $95,000 level, it could signal a shift in market sentiment, leading to a potential correction. Losing support at this level may indicate that the bears have taken control of the situation, and the price may decline further. The next few days will be crucial to determine whether BTC can continue its rise or whether the market will enter a period of consolidation or decline. Investors will be watching the price action closely for signs indicating a clear trend.

Featured image by Dall-E, chart from TradingView

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