Traders in the crypto leveraged market posted heavy losses in the aftermath of Bitcoin’s sudden fall below the psychological $100K support line.
CoinGlass data showed that the event triggered liquidations across the market worth more than $1.08 billion, with more than 80%, or approximately $817 million, being liquidated from the bulls.
The single largest liquidation order occurred on OKX, a BTC-USDT-SWAP worth $19 million.
High funding rates and Thursday’s price move indicated that many traders were over-leveraged, believing that prices would continue to rise.
Forced liquidations caused a sharp drop in price when the market turned against them.
Analysts had previously cautioned that market participants should be mindful of “profit-taking” along the way and that assets rarely increase “forever” in a straight line.
In perpetual futures contracts, funding rates are what traders with long and short positions must pay for the contract to be maintained. Funding rates have been high lately, as many traders have made bearish bets on the asset price, which is atypically long.
Many traders assumed that prices would keep rising and went overboard with leverage, as indicated by Thursday’s price move and the high funding rates.
Price Action
Bitcoin is currently trading at about $98K. The daily chart’s Relative Strength Index (RSI), which is 64 and has rejected its overbought level of 70, indicates weak bullish momentum. Bitcoin may prolong the correction and retest its $90,000 support level if the decline continues.
Fundamentals Still Healthy
On Wednesday evening, Bitcoin reached a peak of $103,844. This price action followed President-elect Donald Trump’s announcement that Paul Atkins would be his nominee to chair the Securities and Exchange Commission.
- The appointment could fulfill Trump’s most significant campaign promise to the cryptocurrency sector: replacing Gary Gensler, who has become a controversial figure due to the SEC’s enforcement-based regulation strategy.
- The return of the Republican leader to the White House, with Elon Musk on his side, is seen as a positive for the digital assets sector, which has gained a degree of credibility since the election that was unimaginable 16 years ago when the currency was created. Due in part to the industry’s financial support, Donald Trump reversed his stance during his campaign, after initially labeling cryptocurrencies a scam during his first term. He now promises to turn the U.S. into “the global center of Bitcoin and cryptocurrencies.”
- In a Truth Social post on Thursday morning, Trump congratulated Bitcoin investors, commenting that “together, we will make America great again,” and that “you’re welcome” for his contribution to Bitcoin’s surge to $100,000.
Thursday marks a celebration for longtime Bitcoin investors who have “HODL’d,” or held on for dear life, through several of the cryptocurrency’s boom-and-bust cycles, when financial institutions and the government were either contemptuous of or outright hostile to the asset class.