On Wednesday, Bitcoin plunged more than 3% to $83,000, with long positions hit by forced liquidations, adding further selling pressure to the market and dragging cryptocurrency-related stocks lower. According to liquidation data from CoinGlass, the crypto market experienced a rapid sell-off, with roughly $696 million in liquidations within 24 hours, almost entirely borne by long traders, after which Bitcoin fluctuated below the $83,000 level. The vast majority of losses were concentrated within a 12-hour window, mainly stemming from forced liquidations of Ethereum and Bitcoin positions. This pullback came shortly after Bitcoin had just climbed to its highest level since January of this year.
Frederick Tessen, head of research at Glassnode, said: "Compared to historical averages, spot exchange and U.S. Bitcoin ETF trading volumes remain at abnormally low levels. The current market is driven more by position dynamics than by fresh buying demand." The researcher noted that if buying volume and ETF trading activity pick up substantially, Bitcoin could stabilize above $85,500 and then push toward $92,000. Conversely, if the price falls below $81,000, it could trigger a new round of forced liquidations.
Further reading: How to allocate your crypto assets. Bitcoin against the U.S. dollar was quoted at $83,535.46, down $2,040.63 (a decline of 2.38%), with data as of 4:30:42 PM UTC, and the market in open status.
Crypto-related stocks also fell broadly on Wednesday, with the leading decliners including Strategy (MSTR), a giant holding large amounts of digital assets, trading platform Coinbase Global, Inc. (COIN), Robinhood (HOOD), and stablecoin issuer Circle (CRCL).
The broader context for this crypto sell-off was: the 10-year U.S. Treasury yield moved higher, oil prices broke above $100, and the overall market weakened in tandem. Hunter Albright, chief revenue officer at SALT Lending, told Yahoo Finance: "Rising bond yields push capital out of riskier assets, and Bitcoin feels that impact first." But Albright also noted that the United States cannot carry debt at current interest rate levels over the long term, which may prompt policy-level intervention and thereby push up asset prices across the board. He added: "The higher yields go, the closer Washington is to stepping in; and intervention means injecting liquidity into the market."