The cryptocurrency market experienced a significant decline on Friday as traders appeared to reduce their long positions following some notable price spikes. Bitcoin, unable to sustain its overnight record high of $73,700, fell by 4% for the day.
Current price trends indicate that Bitcoin may continue to drop and could retest its next major support level around $66,000 if it closes below the $69,700 mark during the Asia trading session. Within the past day, 90,456 traders were liquidated, leading to total losses of $276.84 million. The largest single liquidation order occurred on Binance, amounting to $11.3 million in BTC/USDT.
What Does Liquidation Mean?
“Crypto liquidation” refers to the forced closing of a trader’s market positions. This happens when a trader’s margin account can no longer support their open positions due to significant losses or insufficient margin to meet maintenance requirements. If a trader’s account falls below the necessary margin threshold, the exchange or brokerage may initiate the liquidation process. The trader’s positions will then be forcibly closed at market price to cover losses and unpaid debts.
Bitcoin’s Price Action
Interestingly, Bitcoin’s value continued to rise in October. By the end of Q3 2024, prices had climbed against expectations, with Bitcoin increasing by around 14% in the past month—about half of the growth observed during the previous year. BlackRock clients capitalized on the dip and doubled down on IBIT, its spot Bitcoin ETF, which currently manages over 403,000 Bitcoin. However, buyers showed signs of exhaustion, with the Relative Strength Index (RSI) on the daily chart peaking at an overbought level of 70 on Tuesday before falling sharply to 57.
This indicates a notable waning of bullish momentum. On-chain data reveals that only 1,000 BTC has been added to retail Bitcoin holdings in the last 30 days. Since July 3, when it hit a local bottom, the total assets held by retail investors increased by 18,000 BTC. As of the time of writing, retail investors owned 1.753 million Bitcoin, slightly below the record of 1.765 million at the end of 2023.
These investors’ balances have been declining since May 2023, when retail holdings rose by 27,000 BTC. Retail investors experienced several periods of strong growth prior to this decline, including the market recovery following the COVID-19 crash in April 2020, the peak of the previous bull cycle in April 2021, and the bear market of 2022, which was marked by the collapse of the bankrupt cryptocurrency exchange FTX.
Ethereum’s Price Action
Ethereum’s price approached its crucial support level of approximately $2,500 on Friday after dropping more than 5%. This support level is significant as it aligns closely with the 50% price retracement level at $2,485, the ascending trendline (formed by connecting multiple lows since early September), and daily support at $2,420.
Impact on Crypto-Related Stocks
The losses in the cryptocurrency market also impacted stocks associated with the industry. Shares of cryptocurrency exchange Coinbase and Robinhood fell by 7% and 15%, respectively, after missing earnings forecasts.
Bitcoin miners Cleanspark, Riot Platforms, and MARA Digital also experienced declines in the range of 5% to 10%.