Cryptocurrency Market Turmoil: Liquidation and Price Drops

On July 5, 2024, a significant event shook the cryptocurrency market when Mt. Gox executed a massive sell-off of 47,000 Bitcoin (BTC) valued at $2.7 billion. This move had a profound impact, leading to a cascade effect of liquidations totaling $685 million among traders, as reported by the on-chain analytics firm CoinGlass.

The aftermath of the sell-off demonstrated the severity of the situation, with long traders and market optimists bearing the brunt of a $590 million liquidation, while bearish short sellers faced $95 million in losses. Notably, the largest single liquidation of $18.48 million occurred on the renowned cryptocurrency exchange, Binance, in the ETHUSDT pair.

The trigger for this widespread liquidation was the surge in selling pressure on major cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), Solana (SOL), and XRP (XRP), all experiencing significant plunges. According to CoinMarketCap data, within 24 hours, BTC, ETH, SOL, and XRP respectively lost over 7.5%, 11%, 8%, and 15% of their value.

Breaking down the liquidation figures, BTC witnessed the highest impact with $226 million worth of long and short positions being liquidated, followed by ETH and SOL with $166 million and $24 million losses, respectively.

Apart from the liquidation turmoil, the market also saw a decline in open interest by 12%, indicating a departure of investors or major players from the current crypto landscape.

Bitcoin Technical Analysis and Future Projections

Technically analyzing BTC, the charts suggest a bearish trend as it broke below the 200 EMA (Exponential Moving Average). On a daily timeframe, the next support level for BTC is anticipated around $52,500. Breaching this support could lead to further liquidations, estimated at $173 million.

Considering the ongoing market conditions, a daily close below $52,500 might drive the price down to $48,000. However, the Relative Strength Index (RSI) signals an oversold market, hinting at a potential rebound.

As of now, BTC is hovering around $54,000, having encountered an 8% price drop in the last 24 hours. Reflecting on its recent performance, BTC has shed approximately 12% of its value over the past 7 days and a significant 24% drop in the last 30 days.