Bitcoin Faces $300M in Long Liquidations as Price Dips to $62K

A sudden decline in Bitcoin’s price over short time periods has created a state of alarm among investors holding leveraged long positions. However, experts suggest that this could be a temporary setback.

Market Update

On August 1, Bitcoin (BTC) experienced a dramatic price drop, plunging by over $1,600 within an hour, leading to significant volatility in the market.

According to data from TradingView, the price of BTC fell from $64,000 to $62,800 during this tumultuous period.

At the point of reporting, the BTC/USD pair had reached a low of $62,212 on Coinbase, a level not observed in the past two weeks.

The downward trend resulted in the liquidation of long positions totaling approximately $310.27 million within a 24-hour period, leading to a total market wipeout of $337 million, as per Coinglass data.

Over the last day, more than $77 million in long Bitcoin positions were liquidated, including $26.6 million lost in just the last four hours.

The most significant individual liquidation took place on a crypto exchange, where an ETH-USDT swap amounted to $4 million.

Market analyst DW remarked that the extent of the liquidations wasn’t “extreme,” despite the notable decline. DW noted that the market is reverting to low liquidity conditions, which could exacerbate selling pressure going forward.

“Mt. Gox is not behind us. It is summer now, and following BTC 2024, we return to low liquidity, which means any selling activity will have a more pronounced effect.”

In contrast, independent analyst Mags conveyed a more optimistic perspective on Bitcoin, highlighting that the price remained above key moving average support, nearing the upper limits of a descending broadening wedge formation.

“The hash ribbons have also signaled a buying opportunity,” Mags stated in a recent post on X.

According to Mags, the current price fluctuations of BTC could be seen as a short-term correction akin to previous situations where the ribbons transitioned to a bullish signal, indicating potential for subsequent price increases.

“In the past, the price would dip initially, followed by a period of consolidation and then a strong V-shaped recovery. As long as BTC stays above $60,000, any dips are opportunities to buy.”

Historical Trends Indicate Possible Decline for Bitcoin in August

The price correction observed on the first day of August aligns with historical patterns, suggesting Bitcoin often exhibits weaker performance during this month following a volatile July.

Data from Coinglass indicates that, on average, Bitcoin returns in August are around 2.24%. Over the past 11 years, the coin has closed in negative territory eight times during August, with a median return of -6% historically.

Independent analyst Karen also noted this trend in a post on X, commenting on the pronounced drop in Bitcoin’s value.

“On the first day of August, while other assets like gold and oil are seeing gains, Bitcoin is faltering.”

Karen further observed that even with the anticipation of potential interest rate cuts from the Federal Reserve, it hasn’t been sufficient to boost Bitcoin’s price significantly.

This article does not offer investment advice. Each trading decision carries risks and requires thorough research by the investor.