After a major crypto market correction that saw $1.7 billion wiped out just four days prior, Bitcoin experienced a sharp reversal after appearing to overcome a significant resistance level. This recent downturn follows another substantial liquidation event totaling $1.12 billion.
Notably, Ethereum (ETH) led in liquidations, with $425 million in long positions being closed out, surpassing Bitcoin’s $272 million. Over 250,000 traders faced liquidation, with the single largest instance occurring on Hyperliquid involving an ETH-USD pair, valued at $29.12 million.
Is this recent price action the elusive bottom traders have been anticipating this October, or does it signal the beginning of a prolonged bear market?
Let’s analyze the situation.
(Source – Coinglass)
Bitcoin’s failure to maintain gains above the $114,000 level appears to have trapped many traders in long positions. Liquidations of long positions vastly outnumbered short liquidations. The price of BTC swiftly declined below the Volume Profile’s Point of Control (POC), dragging the wider altcoin market down even further.
Currently, the Relative Strength Index (RSI) is showing a bullish divergence, with Bitcoin finding support between $108,000 and $110,000, coinciding with the lower boundary of the Volume Profile indicator. Many market participants view this level as a potential entry point, particularly with anticipation of upcoming interest rate adjustments that could potentially drive Bitcoin’s price higher.
(Source – TradingView)
Examining the daily chart, a key area of interest aligns with the $108,000-$110,000 range. However, should this support level fail to hold, a further decline in Bitcoin’s price is possible, potentially leading to new lows.
Such a scenario could see BTC retesting the 200-day Smoothed Moving Average (SMA) and potentially challenging the overall uptrend established during the bull market. If buyers intervene at these levels, a strong V-shaped recovery is possible, suggesting the market is poised for another upward surge.
(Source – TradingView)
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Originally reported at 99bitcoins.com: “Why Did Crypto Just Drop? Bitcoin Broke Key Resistance Level” by Ivan Andonov