Key Takeaways
The reason behind Bitcoin’s price fall today could be the rapid unwinding of leveraged long positions after selling pressure prodded a correction from $122K over the past two weeks. The liquidations have triggered a cascade, sending BTC to $115,000.
Bitcoin [BTC] was down 5.8% from its all-time high at $123,091 made on the 14th of July.
BTC was down 2% in the past 24 hours, at press time, and its daily trading volume has increased by 24.6%. This suggested a flurry of selling activity in recent hours as the price dropped below the $116k local support.
The Thailand-Cambodia border conflict was likely one of the reasons that sent Bitcoin into its pullback.
However, this local conflict might not impact crypto price trends in the long term, though it might have triggered a risk-off sentiment among investors in the short term.
The Bitcoin spot ETF flows have been negative from the 21st to the 23rd of July. This also showcased bearish sentiment, but the 24th of July saw $226 million inflows, even though BTC went down 0.35% on the day.
This price dip is likely driven by activity in the derivatives market, including large-scale long liquidations and profit-taking activity by investors.
Liquidations drive Bitcoin down, but they might also spark a rally
The past 24 hours saw $144.8 million worth of liquidations for Bitcoin, with $128.77 million being long positions. The price breakdown below the $117K and $116K local support levels has led to a modest drawdown.
In past cycles, 20% to 30% drawdowns during bull runs were common. Hence, a 5.8% move was nothing to panic about for investors. Meanwhile, traders need to be cautious.
In a post on X, CoinGlass noted that 10k Bitcoin Open Interest (OI) was added on Binance’s BTC/USDT pair.
This occurred while Bitcoin retested the $115K round number as support. The huge influx of OI promised volatility in both directions.
Source: BTC/USDT on TradingView
The 4-hour chart showed that the $116K-$117K short-term support zone has been shattered.
The high trading volume in recent hours showcased bearish conviction and heavy selling. This could send prices to the next key demand zone at $111K-$112K.
