On the 7th of October, Bitcoin [$BTC] slipped below $85,000 as $BTC’s attempts to break past $87,000 were rejected by unwavering sellers. At the time of writing, Bitcoin had retreated to approximately $84,128.
Despite this recent decline in price, Bitcoin is still trading within the main range that has held the price since the last week of September.
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If the buyers can defend or regain the prices around $85,000–$86,000, then there will be renewed efforts to hold within this trading range. If successful in doing so, then the bulls should once again be able to attempt another run up to $87,000.
Conversely, if the bears continue to exert downward pressure on the price, and it falls below $83,000, then it will be apparent that the bears have successfully taken control. As a result, this would expose the $80,000 zone.
Liquidations surge as longs take the hit
The decline in price action extended to derivative markets, as over $550.53 million was liquidated across crypto markets within 24 hours. Of that lot, over $484.6 million of this was comprised of long positions.
Therefore, it appears that many of the bull market participants carried the brunt of the downturn.
As Bitcoin lost range support, leveraged positions faced forced closures, increasing the downward pressure on the price. This resulted in accelerating the move toward even greater losses.
According to CoinGlass data, Ethereum [ETH] recorded the largest share of liquidations at $176.20 million after falling below the $2,600 mark. Bitcoin followed closely behind, with liquidations totaling $144.67 million.
These moves simply imply that the impact of the downside spilled beyond $BTC. This liquidation wave could now reduce excessive leverage and create a cleaner market structure.
However, another sharp decline could trigger further long liquidations. Conversely, stabilization would allow sidelined buyers to rebuild positions without facing the same leverage pressure.
Sentiment cools from Greed
The liquidation wave has cooled leverage, but sentiment remains bullish rather than fearful. At press time, the Fear and Greed Index stood at 63, after declining from 67 on the 6th of October.
More importantly, it is clear that the index rose to over 80 at the end of August before retreating sharply.
For now, fading greed reflects caution rather than capitulation. As such, stability in prices will be the next factor in either building new levels of confidence or creating additional weakness.
Final Summary
- Bitcoin [$BTC] fell below $85k as over $550.53 million in positions were liquidated.
- Crypto markets need leverage to reset and demand to stabilize, or further Bitcoin weakness could trigger another broad liquidation cycle.
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