The digital asset market faced a setback as Bitcoin (BTC), the leading cryptocurrency, saw a notable 5.47% price drop within a minute after surpassing the historic $100,000 threshold for the first time.
This significant downturn in price has impacted overall market sentiment, leading to the liquidation of nearly a billion dollars’ worth of both long and short positions.
Reasons Behind BTC’s Price Drop
The exact cause of this substantial price decline remains unclear. However, data from Coinglass, an on-chain analytics firm, suggests that a considerable inflow into exchanges may have triggered the drop.
Reports on BTC spot inflow/outflow metrics indicate exchanges observed a substantial $732.5 million BTC outflow. In the cryptocurrency realm, “outflow” signifies the movement of assets from wallets to exchanges, often signaling selling pressure and a potential price decrease.
The recent price decline has stirred anxiety among traders and investors, raising doubts about the possibility of further drops or a market recovery.
Technical Analysis and Key Levels for Bitcoin
Per CryptoCrypto’s technical analysis, BTC is currently consolidating in the $92,000 to $99,100 range. However, a recent breakout from this range appears to have been a bullish trap, with BTC failing to maintain levels above and falling back within.
An analysis of recent price movements suggests that if BTC breaches the upper limit of the range and closes a daily candle above $99,700, there’s a good chance it may retest and hold above the $100,000 mark.
Conversely, a break below the range and a daily candle close under $91,500 indicate a potential drop to $86,000.
Currently, BTC’s Relative Strength Index (RSI) hovers at 62, just below the overbought threshold, implying potential upward movement in the near future.
Significant Liquidation Thresholds
In addition to technical factors, major liquidation levels are marked at $96,957 on the lower end and $99,813 on the upper end. Coinglass data shows significant overleverage at these levels.
If the market sentiment turns bullish and BTC approaches $99,813, around $938 million in short positions could be liquidated. Conversely, a bearish turn with prices hitting $96,957 might lead to liquidation of approximately $364 million in long positions.
This data indicates a prevailing bearish sentiment as many doubt BTC’s ability to break the $99,813 level.
Currently, BTC trades near $97,970, marking a 4.10% price decline over the past 24 hours. Trading volume increased by 4% during this period, suggesting growing investor and trader engagement compared to the previous day.