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Bitcoin (BTC/USD) Rebounds to $55k; $600 Million in Leveraged Longs Liquidated

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  • Bitcoin prices sharply declined overnight, falling from $58,000 to below $50,000 before recovering to around $55,000.
  • The drop in Bitcoin’s value reflects a souring of market sentiment, with the Crypto Fear and Greed Index falling significantly.
  • Over $740 million in leveraged positions were liquidated in the last 24 hours, primarily affecting traders with leveraged exposure to Bitcoin and Ether.

Most Read: Markets Weekly Outlook – Rising US Job Fears, Geopolitics in the Spotlight

Bitcoin prices nosedived overnight following excessive selling in the Asian session as market sentiment soured. This was the first Asian session since the US jobs report on Friday, and markets were clearly concerned.

The crypto market is often viewed as a good indicator of market sentiment, and Bitcoin’s plunge from $58,000 to $53,000 within two hours revealed a lot. The selloff extended to a range of risk assets, with Bitcoin briefly dipping below the $50,000 mark. The world’s largest cryptocurrency has since recovered and is trading around the $55,000 mark at the time of writing.

The Crypto Fear and Greed Index is now at 24 which is a sharp drop from the 74 we recorded a week ago.

Source: FinancialJuice

The sharp downward move in the Asian session led to over $740 million in leveraged positions being wiped out across the crypto market in the last 24 hours, with more than $644 million in leveraged longs being liquidated, according to CoinGlass data.

Notably, traders seeking leveraged exposure to Ether were the hardest hit, with over $256 million in ETH longs liquidated, while $231 million in BTC longs were forcibly closed.

Source: Coinglass, Cointelegraph

The US session has brought relief to markets as sentiment appears to have improved. US indices rising nicely with the Nasdaq 100 recovering a significant chunk of its pre-market losses. Market participants in some quarters may be eyeing this as a potential ‘buy the dip’ opportunity as we have heard in the past. 

Similar sentiments were echoed by JPMorgan’s head of positioning intelligence, John Schlegel said “ Overall, we think we’re getting close to a tactical opportunity to buy-the-dip and our Tactical Positioning Monitor could dip further in the next few days. That said, whether we get a strong bounce or not could depend on future macro data.”

Overall Bitcoin enthusiasts remain bullish over the medium and longer term given that markets are pricing in more aggressive rate cuts. This usually leads to a positive run for crypto as market participants will have more money in their pocket. Whether the lows are in and the selling is over, that remains to be seen. 

Technical Analysis BTC/USD

From a technical perspective, Bitcoin did not close below the $50,000 mark on the H4 or Daily chart, which is crucial. A candle close below $50,000 is necessary for Bitcoin to test the $45,000 support area. Below this, there’s a key support zone around the $43,000 level, where the rally to all-time highs began back in February.

If the $50,000 level holds, Bitcoin could continue to advance, with immediate resistance at the 56,561 and 58,586 levels. A push beyond these levels will shift focus to the 50, 100, and 200-day moving averages (MAs), which all lie within a $3,000 range between 61,538 and 64,350.

Support

  • 50000
  • 45000
  • 43000 

Resistance

  • 56561
  • 61538
  • 64350

Bitcoin (BTC/USD) Daily Chart, August 5, 2024

Source: TradingView.com (click to enlarge)

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Zain Vawda

Zain Vawda

Market Analyst at OANDA
Zain is an experienced financial markets analyst and educator with a rich tapestry of experience in the world of retail forex, economics, and market analysis. Initially starting out in a sales and business development role, his passion for economics and technical analysis propelled him towards a career as an analyst.

He has spent the last 3 years in an analyst role honing his skills across various financial domains, including technical analysis, economic data interpretation, price action strategies, and analyzing the geopolitical impacts on global markets. Currently, Zain is advancing in obtaining his Capital Markets & Security Analyst (CMSA) designation through the Corporate Finance Institute (CFI), where he has completed modules in fixed income fundamentals, portfolio management fundamentals, equity market fundamentals, introduction to capital markets, and derivative fundamentals.

He is also a regular guest on radio and television programs in South Africa, providing insight into global markets and the economy. Additionally, he has contributed to the development of a financial markets course approved by BankSeta (Banking Sector Education and Training Authority) at NQF level 6 in South Africa.
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