Leveraged crypto long liquidations top $400 million in an hour, Bitcoin drops

FUNDAMENTAL OVERVIEW

Over the course of about an hour, more than $400 million in leveraged long positions were liquidated, sending Bitcoin lower. No specific trigger was identified for the decline. Additionally, macro and geopolitical headwinds have capped further upside, providing little reason for gains.

The CFTC put forward a new federal framework for crypto trading platforms on October 5. Under the proposal, qualifying exchanges could choose to be overseen by the CFTC, with mandates including proof of reserves and market-manipulation controls. While this is a positive development for the crypto market structurally, macro factors have dominated attention lately.

Oil prices surged after Houthi attacks on Saudi Arabia, including airports, and reports of damage to Saudi energy infrastructure, pushing Treasury yields and the US dollar higher again.

Additionally, a storm is forming that threatens US Gulf production and refining infrastructure. According to Reuters, facilities accounting for about 15% of US crude output and 5% of natural-gas output may be impacted, and up to six major refineries could experience disruptions.

While not transformative, these events could keep oil prices elevated in the near term, thereby supporting Treasury yields and the US dollar.

With a sparse economic calendar this week, Bitcoin may stay rangebound without a significant catalyst. A US-Iran negotiations breakthrough could boost Bitcoin by alleviating inflation and rate hike worries, whereas a fresh escalation in tensions could cause another steep decline.

BITCOIN TECHNICAL ANALYSIS – DAILY TIMEFRAME

Bitcoin is retracing to the major upward trendline and also the key 82,500 support zone, providing confluence. Buyers are expected to step in around these levels, with risk defined below support, aiming for a rally to 98,000. Sellers, conversely, will look for a break below to add to short positions targeting a correction to 75,000.

BITCOIN TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME

The price slipped below the minor support near 85,000 and extended losses as additional sellers entered, targeting a pullback to 82,500 support. Should the price bounce at 82,500, sellers are expected to lean on resistance at 85,000, with risk above, positioning for a break below the trendline and the 82,500 support. Buyers, meanwhile, will seek a break above resistance to boost bullish bets toward 98,000.

BITCOIN TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME

A minor downward trendline is defining the recent bearish momentum. If price retraces to this trendline, sellers are likely to sell into it, with risk above, to continue pushing to new lows. Buyers will look for a break above to start positioning for a rally to new highs. The red lines indicate the average daily range for today.

UPCOMING CATALYSTS

The FOMC meeting minutes are due today. US Jobless Claims figures are scheduled for tomorrow. The week ends on Friday with the University of Michigan Consumer Sentiment survey.