Bitcoin Futures Liquidation Forms Local Price Bottom — A Return To $65,000 Inevitable?

Opeyemi Sule

9 months ago

2 mins read

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The price of Bitcoin hasn’t quite started the month as widely expected, falling to around the $60,000 mark on Thursday, October 3rd. This bearish pressure is believed to have been triggered by the escalating tension in the Middle East after Iran fired missiles into Israel.

However, the premier cryptocurrency seems to be making a turnaround to close the week, bouncing back above $62,000 on Friday. The latest on-chain observation shows that this latest recovery seen with the Bitcoin price is connected to dwindling selling pressure.

4,000 Long Positions Liquidated On October 1 — What Next?

In a new Quicktake post on the CryptoQuant platform, an analyst with the pseudonym Caueconomy discussed the impact of the recent liquidations of long positions in the Bitcoin futures market. According to the analyst, the ongoing liquidations have reduced the bearish pressure on the Bitcoin price.

For context, futures allow investors to speculate on the price of a specific asset (Bitcoin, in this scenario). A long position is taken when a BTC trader buys a futures contract, predicting the coin’s price to rise at a later date. The trader incurs a loss when the asset’s price falls below the purchase price specified in the futures contract.

According to data from CryptoQuant, more than 4,000 long positions were liquidated following the latest price decline on Tuesday, October 1, representing the second-largest liquidation event so far this year. Although liquidations reflect significant selling activity and investor losses, they can also signal pivotal shifts in market sentiment.

The CryptoQuant analyst noted that periods of severe losses and market liquidations often lead to the formation of local price bottoms. “During significant price declines, the number of contracts purchased tends to drop sharply due to liquidations, which reduces selling pressure in the market,” Caueconomy said.

Furthermore, the analyst mentioned that the price of Bitcoin might be gearing up for a short-term recovery due to the reduced selling pressure. However, Caueconomy highlighted the importance of increasing buying strength from the investors for the Bitcoin price to make a full comeback.

Bitcoin Price At A Glance

It does appear like the price of Bitcoin established a local bottom around the psychological $60,000 level before a pivotal rebound. As of this writing, the premier cryptocurrency trades around the $62,000 mark, reflecting an over 2.5% increase in the past day.

However, this single-day performance has not been enough to wipe Bitcoin’s 5% price decline over the past week. With selling pressure dropping and the positive price history in October, though, it seems like only a matter of time before the flagship cryptocurrency returns to $65,000.

Featured image created by Dall.E, chart from TradingView

Opeyemi Sule

Opeyemi is a proficient writer and enthusiast in the exciting and unique cryptocurrency realm. While the digital asset industry was not his first choice, he has remained absolutely drawn since making a foray into the space over two years. Now, Opeyemi takes pride in creating unique pieces unraveling the complexities of blockchain technology and sharing insights on the latest trends in the world of cryptocurrencies.

Opeyemi savors his attraction to the crypto market, which explains why he spends the better parts of his day looking through different price charts. “Looking” is a rather simple way to describe analyzing and interpreting various price patterns and chart formations. However, it appears that is not Opeyemi’s favorite part - in fact, far from it.

Being able to connect what happens on a price chart to on-chain movements and blockchain activities is what keeps Opeyemi ticking. “This emphasizes the intricacies of blockchain technology and the cryptocurrency market,” he would say. Most importantly, Opeyemi thinks of any market insights as the gospel, while recognizing that he is only a messenger.

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Ultimately, Opeyemi is a good writer and an even better person who is trying to shed light on an exciting world phenomenon - cryptocurrency. He goes to bed every day with a smile of satisfaction on his face, knowing that he has done his bit of the holy assignment - spreading the crypto gospel to the rest of the world.

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