Why did Bitcoin's price plummet today? Long position liquidations and profit-taking put downward pressure.

Bitcoin falls after failing to break $87,000… $83,520 'on trial' as long liquidations surge 163%

▲ Bitcoin sharp drop/ChatGPT generated image ©

Bitcoin (BTC) dropped to $84,558.22 after failing to hold above $87,000, leading to a massive liquidation of leveraged long positions. Amid profit-taking by short-term holders and interest rate pressures, the support level of $83,520 and the expiration of $18 billion worth of options have emerged as key variables determining the next direction.

According to crypto market tracker CoinMarketCap on September 23 (local time), Bitcoin traded at $84,558.22, down 1.77% over the past 24 hours. The total market capitalization of all virtual assets also decreased by 1.74% during the same period, showing a similar trend across the broader market. Notably, Bitcoin showed a high correlation of 96% with the S&P 500, indicating sensitive movements to interest rates and macroeconomic variables.

The direct downward pressure stemmed from the liquidation of leveraged long positions. As Bitcoin, which recently rose to $87,265, failed to maintain its upward momentum, the volume of long liquidations surged by 163.73% to $141.45 million within 24 hours. Analysis suggests that forced liquidation of bullish positions using excessive leverage during the price decline led to additional selling, accelerating the downward trend. Whether funding rates continue to remain negative in the future was also presented as an indicator to assess further bearish pressure.

Profit-taking by short-term holders also acted as a burden. Following the recent rally, approximately 47,600 BTC moved to exchanges, increasing the likelihood of selling. Simultaneously, hawkish remarks from the U.S. Federal Reserve (Fed) and U.S. Treasury yields exceeding 5% pressured risk asset investment sentiment. The media explained that the adjustment was amplified by the combination of natural profit-taking after the recent strong rally and pressures from traditional financial markets. The next major macroeconomic variable presented was the release of the U.S. Consumer Price Index (CPI) on October 14.

Technically, $83,520 is the key short-term support level. If this price holds and inflows into Bitcoin spot ETFs continue, there is a possibility of sideways movement in the $83,520-$87,265 range. Conversely, if the daily closing price forms below $83,520, there is a risk of a further decline to $81,700. To revive the upward trend, Bitcoin must first recover $85,834, and if it surpasses this, the possibility of retesting the recent high of $87,265 opens up.

A variable that could increase short-term volatility is the scheduled expiration of Bitcoin and Ethereum (ETH) options on September 25. The expiration volume is approximately $18 billion, and CoinMarketCap highlighted that attention should be paid to whether option expiration could trigger another selling movement. Currently, the short-term trend is closer to neutral to bearish, but key support structures are maintained, and whether Bitcoin spot ETFs record net inflows again on the next trading day was presented as a key signal to confirm the recovery of institutional demand.

*Disclaimer: This article is for investment reference only and does not take responsibility for investment losses based on it. The content should be interpreted for informational purposes only.*