A “key level” comes into play as Bitcoin challenges longer-term support lines and deals a major blow to long positions.
Bitcoin (BTC) fell by $8,000 in hours on Wednesday as hodlers saw a return of levels not seen since the start of February.
Bitcoin comes for leveraged traders… again
Selling pressure, already high, kept coming as claims of a fresh Chinese crackdown combined with a stocks rout and a strengthening United States dollar.
In what is being called by some a “capitulation bottom,” Bitcoin failed to hold $40,000 support and began abrief freefall below its significant 200-day moving average.
While the dip in dollar terms was average by Bitcoin’s standards, it caused mayhem among speculative traders, with a single hour seeing $2.7 billion of liquidations. Total 24-hour liquidations stood at $6.5 billion.
“Long leveraged traders liquidation spike on that move down in the past hour,” Philip Swift, founder of analytics resource LookIntoBitcoin, tweeted alongside a chart.
Rafael Schultze-Kraft, co-founder of fellow analysis resource Glassnode, added that short-term BTC investors were now at a loss and that current prices represented a line in the sand.
He referenced Glassnode’s Short Term Holder MVRV indicator, which looks at the price of unspent transaction outputs 155 days old or less.
“Short-term holders now under water, as STH-MVRV drops below the neutral line. Key level,” he commented.
Altcoins fall in line
At the time of writing, Bitcoin was attempting to cement a floor above $37,000 amid uncertain conditions.
On altcoins, the picture was similarly grim, with many major-cap tokens shedding nearly 30% on the day.
Among the biggest drops were Telcoin (TEL) and Shiba Inu (SHIB), both of which had previously booked significant gains.
Ether (ETH), meanwhile, briefly lost sight of $2,000 before recovering.
A silver lining for Bitcoin bulls was its market capitalizatio dominance, which rose from below 40% to nearly 45%.