Executive Summary
The Story So Far
Why This Matters
Who Thinks What?
Bitcoin (BTC) experienced a notable price correction this week, slipping below the $110,000 mark and triggering over $800 million in liquidations across the cryptocurrency market, primarily affecting overleveraged long positions. Despite the downturn, which saw BTC briefly touch $108,666 during early Asian trading on Tuesday, institutional demand remained resilient, with Bitcoin Spot Exchange-Traded Funds (ETFs) recording $219 million in fresh inflows and corporate treasuries adding significant amounts of BTC to their reserves.
Market Liquidations Intensify
The sharp decline, which saw Bitcoin start the week on a negative note, led to the liquidation of 179,722 traders within a 24-hour period, according to CoinGlass data. This extensive unwinding of positions underscores the weak investor sentiment and fading market momentum that characterized the start of the week.
Bitcoin alone accounted for over $267 million of these liquidations, with more than 82.44% stemming from overly bullish long positions. This indicates that many traders were positioned for continued price appreciation, only to be caught off guard by the sudden downturn.
Among the most significant events was a single BTC/USDT position worth $39.24 million liquidated on the Huobi exchange (HTX). This massive liquidation highlights the risks associated with high leverage in volatile markets.
Institutional Demand Provides Counterbalance
Counteracting the bearish sentiment, institutional and corporate entities demonstrated continued confidence by buying the dip. SoSoValue data indicated that Bitcoin Spot ETFs ended a six-day streak of outflows by attracting $219 million on Monday.
Furthermore, treasury companies such as Metaplanet and Strategy collectively acquired 3,184 BTC on Monday. This sustained demand from institutional players suggests a long-term bullish outlook despite the short-term price fluctuations and market volatility.
Technical Indicators Point to Bearish Momentum
From a technical perspective, Bitcoin’s price found rejection from its previously broken trendline on Saturday, declining more than 5% until Monday. It closed below its 100-day Exponential Moving Average (EMA) at $110,798, signaling renewed weakness in price action.
The Relative Strength Index (RSI) on the daily chart reads 38 after facing rejection from its neutral level of 50 on Friday, indicating strong bearish momentum. Adding to the bearish thesis, the Moving Average Convergence Divergence (MACD) indicator showed a bearish crossover last week.
Should the correction persist, BTC could extend the decline toward its next significant support level, which is the 200-day EMA, currently around $103,739. This level could provide a crucial psychological and technical floor for the price.
Potential for Reversal
Conversely, a potential reversal could occur if BTC manages to close above its 100-day EMA at $110,798 and finds support around it. Such a move could alleviate some of the immediate bearish pressure and pave the way for a rally towards the key resistance level of $116,000.
The recent Bitcoin price dip has highlighted market fragility through significant liquidations, yet it has also showcased persistent institutional and corporate demand. While technical indicators point to continued bearish pressure in the short term, the market remains at a critical juncture, with key support and resistance levels determining its immediate trajectory.
