Bitcoin (BTC) has seen a freefall from $61,000 to $59,000 after registering a 4% increase in upward momentum during Asian trading hours. However, the massive drop occurred in the past few hours, resulting in $9.92 million worth of long positions being liquidated out of $10.20 million liquidated, according to on-chain analytics firm CoinGlass.
Why is Bitcoin price dropping?
If we look at the current market conditions, we see that short sellers are dominating the market and creating significant selling pressure.
The possible reason behind this ongoing sell-off is the lack of interest from exchange-traded funds (ETFs) traders and CryptoQuant’s negative funding rates. According to CoinGlass data, this is the second consecutive day that the US spot Bitcoin ETF has recorded a negative flow of 1.77K BTC. Meanwhile, BTC’s funding rate currently stands at around -0.002.
Together, these on-chain data points to bearish sentiment, with short sellers dominating the market. If these sentiments persist and the BTC price drops to the $58,500 level, long positions worth around $421 million could be liquidated.
Bitcoin Technical Analysis and Upcoming Levels
BTC’s daily chart is looking extremely bearish and is also trading below the 200 Exponential Moving Average (EMA) on a daily timeframe, indicating that it is in a downtrend. With the current price rejection from the 200 EMA, there is a high chance that BTC may drop towards the $58,000 level, a crucial support level.
Since August 7, 2024, Bitcoin has been consistently found to find support at this crucial level. If BTC holds this level, there is a high chance of a price reversal. However, if it fails to stay above $58,000 and a daily candle closes below $57,000, it could drop to $54,000 in the coming days.
BTC's Open Interest and Trading Activity
With a significant price drop of over 3.5% in the last three hours, BTC’s open interest has dropped by 3.1%, according to CoinGlass data. At the time of going to press, BTC is experiencing immense selling pressure and is currently trading around the $59,085 level and has seen a price drop of 0.5% in the last 24 hours.
Meanwhile, trading volume has dropped by more than 30% over the same period, indicating lower participation and increased fear among traders.
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