The cryptocurrency market took a hard hit this October 21. Bitcoin (BTC) lost the psychological support of $108,000. The drop triggered massive Bitcoin liquidations of $320 million in just 24 hours. The analysis platform Coinglass reported that 76% of the liquidated funds corresponded to bullish (long) positions, wiping excess leverage from the system.
The data shows a leverage “cleanse.” The $320 million eliminated were bets made with borrowed money. Bitcoin led the forced sales with $88 million. Ethereum (ETH) followed closely with $85 million. Traders expecting rises (longs) saw their margins exhausted. The market quickly eliminated the accumulated over-debtedness. Trading desks felt the impact immediately.
This volatility did not have a single trigger. It was a combination of factors. Geopolitical tensions in the Middle East increased risk aversion. Added to this were significant sales by large holders (whales). Furthermore, the recent personal spending (PCE) data in the U.S. put downward pressure on the economy and risk assets.
Is the $100,000 level the last support for Bitcoin?
With the loss of $108,000, the market now focuses its attention on the $100,000 support. This level is the new key benchmark. If the price fails to hold above that line, panic could increase. Conversely, the $114,000 and $117,000 levels now act as resistance. A liquidation occurs when an exchange closes a leveraged trade. This happens because the trader’s collateral no longer covers the losses.
Bitcoin’s price will continue to show wide jumps. Market participants are looking to hedge. Total leverage has decreased for now. The volume of open interest also declined. This signals a pause until confidence returns. The demand for put options (selling insurance) has grown. The scenario depends on the $100k support. If it holds, the correction could fade. If it is lost on volume, it opens the door to a sideways or bearish market.
