A Bitcoin and altcoin sell-off triggered $1.09 billion in crypto liquidations over the 24 hours to 10 am UTC on Friday, according to CoinGlass. Long positions accounted for $1.05 billion of Thursday's total. The daily liquidation tally was the largest since Aug. 21. On Aug. 21, BTC/USD rose from $73,000 to $79,500, setting two-month highs and triggering $1.3 billion in crypto short liquidations.
The sell-off followed reports that the US government moved more than 12,000 BTC that the government had previously confiscated. Such transfers can lead to potential sales. BTC/USD dropped to $80,350 on Bitstamp, its lowest level since Sept. 18. Bitcoin recovered to around $82,500 on Friday.
The $82,500 level remained important during Bitcoin's broader uptrend since early July. The level was also the breakout point for an inverse head-and-shoulders pattern. Bitcoin would need to hold $82,500 as support to confirm the bullish reversal. Trader and analyst Rekt Capital has tracked the reversal pattern and its similarities to Bitcoin's 2023 recovery. Rekt Capital sees the upcoming weekly candle close as key. Rekt Capital said on Thursday that Bitcoin was failing its retest of about $82,500. Rekt Capital warned that a weekly close below $82,500 and a shift to resistance would return Bitcoin to its macro accumulation range.
Onchain data showed stress among newer Bitcoin investors as the market fell. CryptoQuant contributor Amr Taha reported that short-term holders sent 55,600 BTC to exchanges at a loss on Thursday. Short-term holders are entities holding Bitcoin for up to six months without selling. Transactions at a loss involve coins sent to exchanges at a lower price than during their previous transaction. Such transactions often reflect investors' impulsive urge to exit positions at a loss because investors fear further declines if sales are delayed.
CryptoQuant noted that Thursday's loss tally exceeded the tally on June 26, when Bitcoin fell below $60,000 for the second consecutive day. Taha noted that Bitcoin was trading above $81,000, compared with $59,300 in June, a price difference exceeding 36%. Taha added that exchange users may not have sold their entire positions after transferring Bitcoin to exchange accounts. The CryptoQuant report said aggressive loss-driven selling by short-term participants can historically coincide with short-term capitulation. The report said such selling could exhaust weaker holders and create conditions for a subsequent price recovery.