Unraveling Bitcoin’s Stability Amidst $359.7M Liquidations: The How and Why

Key Points

• Despite a $359M long squeeze, Bitcoin [BTC] remains above the short-term realized price ($86.5K).
• Momentum and higher volume are required for BTC to break out of its current range.

Despite a significant liquidation event that eliminated $359.7 million in long positions, Bitcoin [BTC] remains resilient.

Large-scale Long Squeeze

Data from CryptoQuant shows a large-scale long squeeze recently, with nearly $360 million in long positions wiped out within an hour. However, a sharp downward price spiral was not observed. Instead, BTC quickly rebounded and was traded at around $86,000, indicating solid buyer support and an absence of panic selling.

This recovery suggests that despite losses faced by over-leveraged traders, spot market participants remain steady. The liquidation event appears to have corrected overheated derivatives positions, potentially setting the stage for more sustainable upward movements.

Bitcoin Price and Momentum

Another positive sign comes from the Realized Price – UTXO Age Bands chart. Currently, BTC is above the short-term realized price for the 1-day to 1-week cohort at $86,000 and the 1-week to 1-month cohort at $84,000. These levels often serve as support zones for short-term holders.

From a technical analysis perspective, Bitcoin’s 50-day Moving Average ($85,250) remains a crucial pivot. The price has recently bounced off this level and is trending above it, with the Relative Strength Index (RSI) sitting at around 50, suggesting a closeness to oversold conditions.

Despite a slight cooling, Bitcoin’s momentum remains intact. A retest of the $90,000 psychological level appears likely if momentum picks up again.

What’s Next for Bitcoin?

Bitcoin’s resilience after liquidation and its ability to remain above key realized price levels underscore strong demand. However, BTC needs sustained momentum and increased volume to break out of its current range. If buyers successfully protect short-term support zones, the next bullish movement could already be underway.