Bitcoin has fallen below $83,000, continuing a wave of panic selling in the crypto market that has wiped out billions of dollars in leveraged long positions.
According to Farside Investors data, US spot Bitcoin ETF experienced a net outflow of $89.8 million on October 5th and another net outflow of $3.2 million on October 6th. As the macroeconomic environment weakened, this change diminished one source of buying demand.
Bitcoin traded around $86,600 on Tuesday, but then selling pressure accelerated, which meant that in just about a day, the latest round of declines caused Bitcoin to fall by more than $3,500.
$550 million liquidation wave accelerates the decline of Bitcoin
Leverage has amplified this round of decline.
In the past 24 hours, approximately $550 million in crypto positions were liquidated, of which about $487 million came from long positions. Traders who bet on price increases were forced to exit the market.
During the first major liquidation wave, Bitcoin fell from around $85,341 to $83,790 in about 20 minutes.
The importance of this mechanism lies in the fact that forced liquidation creates additional selling pressure when position holders do not wish to exit their positions.
Oil prices, Treasury yields, and the US dollar are exerting pressure.
This round of selling did not occur in isolation.
As geopolitical tensions around the Strait of Hormuz intensify, Brent crude oil prices rose above $101; at the same time, the yield on 10-year U.S. Treasury bonds climbed above 5.3%, and the U.S. Dollar Index also rose above 102.
This reversal counters the recent macroeconomic favorable trends. Previously, as falling oil prices alleviated the pressure on bond yields, Bitcoin rebounded to around $85,000.
Higher yields will reduce the attractiveness of non-yielding speculative assets, while a stronger dollar will tighten the financial conditions across the crypto market.
$80,000 becomes the next test for Bitcoin
The $83,000 range has served as a support level multiple times after Bitcoin's rebound in September.
Our outlook for Bitcoin considers the range just over $80,000 as the bottom after multiple setbacks around $87,000.
Now that the level of $83,000 has been breached, market attention has shifted to $82,000, followed by $80,000. FxPro Earlier technical analyses also suggested that if the price continues to fall below $83,000, it might pave the way for a further decline to $80,000.
