Crypto: More than a billion dollars in bullish positions liquidated in twenty-four hours

Bitcoin closed below its 50-week moving average after holding it for seven straight weeks. This rupture weakens the scenario of a lasting recovery, but the billion dollars of bullish positions liquidated blurs the signal. Part of the decline results from forced deleveraging rather than voluntary selling.

The threshold which confirmed the recovery has just given way

Bitcoin ended the week around $74,968, or 0.7% below its 50-week moving average, located near $75,488. He had reconquered this threshold on September 20 before chaining seven weekly closes above it.

This average corresponds to the average price of the last fifty weekly closings. It does not mechanically predict the evolution of BTC, but it allows us to assess whether the recent trend still dominates the losses accumulated during the bear market.

Three benchmarks now make it possible to measure the strength of the recovery:

• The 50-week average, close to $75,500;
• The average cost of recent holders, around $75,691;
• The 200-day moving average, located near $73,150.

Bitcoin therefore evolves below the first two thresholds, but still remains close to the third. This configuration means that investors who bought are gradually returning to losses, while the long-term trend has not yet been clearly broken.

The proximity between the 50-week average and the acquisition cost of short-term holders, however, reinforces the resistance between 75,500 and 76,000 dollars. A return to this zone may encourage some recent buyers to sell as soon as they regain their entry price.

Crypto liquidations accelerated the breakout

The weekly close came during a particularly large wave of liquidations. In twenty-four hours, approximately $1.15 billion in crypto positions were automatically closed, including 1.04 billion in bullish bets.

More than 167,000 traders have been liquidated. Ether positions represented more than $500 million, compared to around $309 million for bitcoin. The largest individual liquidation involved a $48.2 million bullish bet on ETH at Binance.

These forced closures amplify the decline. When a leveraged position no longer has sufficient collateral, the platform automatically sells it, regardless of the trader’s conviction. An initial drop then triggers additional sales, which can cause further liquidations.

The available figures also remain incomplete. Some platforms, including Binance and OKX, communicate their data in partial episodes. The actual amount of positions destroyed could therefore exceed published estimates.

This purge does not make the break in the 50-week average insignificant. However, it prevents it from being interpreted as sufficient proof of a return to the bear market. Part of the move corresponds to the elimination of excess leverage accumulated by bullish investors.

The pressure does not only come from derivative products. US spot Bitcoin ETFs suffered $1.28 billion in net withdrawals in the previous week. Their annual balance sheet has thus become negative, with $914.1 million in outflows since January. The absence of institutional spot purchases reduces the market’s ability to absorb crypto liquidations.

The next month will tell if the breakout was temporary

The history of bitcoin does not give a uniform verdict after such a breakdown. During the 2011-2012 and 2019-2020 recoveries, BTC also fell below its 50-week average after regaining it.

In the first case, it had spent twenty additional weeks below this level and fell to 35% below. In the second, he lost the average five times, notably during the shock linked to the pandemic. However, the previous low point of the cycle had held up in both situations.

Alex Thorn, head of research at Galaxy, therefore calls for caution when making historical comparisons. Its sample includes only five comparable winbacks and a market floor can only be confirmed after the fact.

For Galaxy, the bullish scenario would remain defensible if bitcoin returned above the 50-week average within about a month. A rapid recovery would show that the current close was mainly due to liquidations and a temporary episode of risk aversion.

Conversely, several closes below $75,500, accompanied by further withdrawals from crypto ETFs, would turn this line into resistance. The market will then monitor the 200-day average around $73,150, then the area of ​​$69,000 to $70,000.

The most important signal will therefore not be the isolated breakout this week, but the duration spent below the threshold. Bitcoin has not yet invalidated its June low near $59,500. However, he has just lost the technical level which made it possible to present this floor as definitively acquired.