Bitcoin Tumbles Below $70k Triggering Massive Liquidations

By: Eliza Bennet

Bitcoin has faced a notable downturn, slipping below the significant $70,000 mark amid intense market volatility. The cryptocurrency had surged to $73,620 before retracting to $68,830, experiencing a decline of roughly 5.7% within the past 24 hours. This price fluctuation has sparked large-scale liquidations amounting to $289.93 million, impacting nearly 96,574 traders as reported by Coinglass data. Long positions bore the brunt, with $259.21 million liquidated against $30.72 million in short positions.

Market analysts highlight several catalysts influencing this decline. Notably, the impending U.S. presidential election has led to heightened risk-aversion among investors. The narrowing margin between former President Donald Trump and Democratic candidate Kamala Harris in prediction markets such as Polymarket contributes significantly to this sentiment. Bitcoin previously climbed to near-all-time highs as Trump's lead widened, primarily because of his proposed strategic Bitcoin reserve in the U.S. The political uncertainty now translates into a 'risk-off' strategy, impacting the cryptocurrency sector.

This dip in Bitcoin value is further intensified by the S&P 500's performance, which lost traction from a three-month trendline, creating an adverse environment for risk-heavy assets, including cryptocurrencies. Despite favorable earnings reports from major tech companies, tech indices saw a sell-off, fueling overall market pessimism ahead of the election. This is corroborated by analysts emphasizing the pre-election derisking impacting both stock markets and Bitcoin.

Another contributing factor is the unwinding of leveraged positions, as the crypto derivative market witnessed substantial activity with futures open interest reaching new heights. This led to a leverage flush-out, normalizing an over-leveraged market condition, according to seasoned crypto analyst Miles Deutscher. The reduction of $2.1 billion in open interest underscores the magnitude of this correction. The market remains in flux, with experts cautioning about potential volatility as political developments unfold.

At the time of reporting, Bitcoin is trading at approximately $69,446, with market participants advised to brace for further fluctuations due to the evolving geopolitical landscape.