$41M in Bitcoin long positions liquidated as BTC crashes to $29K.

$41M in Bitcoin long positions liquidated as BTC crashes to $29K.

Blockchain Industry: Bitcoin Drops and ETF Applications

On July 24, 2023, the blockchain industry experienced a significant event when over $41 million worth of Bitcoin long and short leveraged positions were liquidated. The unexpected crash in BTC prices below a consolidation level of around $29,500 caused a panic in the market, leading to the shrinking of Bitcoin by over 4%. This drop below the primary support level has heaped pressure on the coin, potentially drawing more selling pressure in upcoming sessions.

Liquidation is a common occurrence in the crypto trading world, happening when exchanges forcibly take over collateral securing leveraged positions when prices move against the trader’s prognosis. In this case, the recent liquidation was triggered by a rapid sell-off in Bitcoin, resulting in a more than 4% price decline within a few hours. The world’s largest crypto exchange, Binance, and derivatives platforms like ByBit and OKX, witnessed significant liquidation amounts.

The majority of the liquidated positions were “longs,” where traders had an expectation of price rises in the days ahead. According to Coinglass data, over $41 million of cumulative long positions were closed, while only $2.5 million of short positions were closed. This discrepancy indicates that despite the plunge in the price of Bitcoin, it moved along the traders’ predicted trajectory.

Despite the liquidation event, Bitcoin has been moving inside a consolidation phase, unable to breach the $31,800 level recorded in mid-July 2023. The recent favorable ruling for Ripple Labs, declaring that XRP was not a security in their case against the Securities and Exchange Commission (SEC), had a positive impact on the broader crypto market. However, Bitcoin’s price action reveals that it has cooled off days later, aligning with the overall market sentiment.

Looking ahead, the collapse in Bitcoin prices comes just a few days after the SEC accepted applications from major financial institutions, including BlackRock, to launch Bitcoin exchange-traded funds (ETFs). The news of BlackRock’s ETF application previously triggered a bull run, driving prices to reach 2023 highs. While fundamental factors may support prices, Bitcoin may edge lower if bulls fail to prop up prices and maintain a consolidation phase.

From a technical standpoint, a close above $31,800 and the July 13 highs may drive the coin towards the $36,000 zone and later $43,000 in a trend continuation formation. These levels are critical as they are derived from Fibonacci extension levels anchored on the recent leg-up from mid-June to mid-July.

In summary, the recent liquidation event in the blockchain industry highlights the volatility and risks associated with leveraged trading in crypto assets. The market sentiment, influenced by factors such as SEC rulings and ETF applications, can significantly impact asset prices. While Bitcoin remains in a bullish formation, the lack of sustained upward momentum raises concerns about its future performance. Traders and investors must closely monitor developments in the blockchain industry to make informed decisions and navigate the dynamic landscape effectively.

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