9h05 ▪ 5 min read ▪ by Luc Jose A.
Summarize this article with:
Bitcoin fell below 82000 dollars on October 12th, triggering a cascade of liquidations across the entire crypto market. Contrary to what the main figure might suggest, the 406 million dollars do not only concern BTC, but all long positions recorded in 24 hours.
In brief
- Bitcoin fell below 82000 dollars on October 12th, after a drop of nearly 4%.
- More than 118000 traders were liquidated in 24 hours, for a total of 488.61 million dollars.
- Long positions accounted for 406.48 million dollars of liquidations, or 83.2% of the total.
- Leverage and Bitcoin ETF outflows increased pressure on the market.
- Investors now monitor US inflation and the 81000 and 85000 dollar levels.
More than 118000 traders liquidated in one day
Bitcoin dropped from a daily high near 84254 dollars to a low around 81000 dollars. This drop of nearly 4% was enough to automatically close many positions funded with leverage.
According to data collected on the evening of October 12th, liquidations reached 488.61 million dollars across the entire crypto market. They affected 118142 traders in 24 hours.
Long positions, which bet on rising prices, represented 406.48 million dollars, or 83.2% of the total. Short positions recorded 82.14 million dollars in liquidations.
Ethereum suffered the highest amount per asset, with 115.19 million dollars. Bitcoin follows with 106.61 million, ahead of Solana at 26.97 million. Zcash and NEAR each approached 20 million dollars.
The largest individual liquidation concerned a long position on bitcoin of 9.65 million dollars. It was executed on Binance when BTC was trading around 81772 dollars. The platform accounted for 52.3% of the recorded liquidations.
Leverage amplified bitcoin’s drop
A liquidation occurs when the losses of a leveraged position reduce the available margin below the level required by the platform. The exchange then automatically closes the position to prevent the loss from exceeding the deposited collateral.
This closure often involves an immediate sale of the asset. When many long positions are clustered around the same levels, an initial drop can trigger several forced sales. These operations push the price further down and trigger new liquidations.
The 406 million dollars therefore do not necessarily represent capital entirely lost by traders. The amount corresponds to the notional value of the closed contracts, which can far exceed the margin actually committed.
The concentration of losses on the buyers’ side nevertheless shows that the market was positioned too optimistically. Bitcoin had tried several times to exceed the 84000 to 85000 dollar zone, without obtaining enough demand to continue its rebound.
Its drop below 82000 dollars then transformed an ordinary pullback into a more brutal move. BTC has since recovered around 82800 dollars but remains below its October 12th high.
ETF outflows weigh on demand
The correction comes after a negative week for US spot bitcoin ETFs. From October 5 to 9, these funds recorded approximately 679 million dollars in net outflows.
The session of October 7 concentrated 484.9 million dollars of withdrawals. It was followed by 244.1 million in outflows the next day. A limited return of 21.1 million dollars on October 9 did not offset this pressure.
These figures indicate a temporary weakening of institutional demand accessible through US markets. However, they are not sufficient to prove that ETFs directly caused the October 12 decline.
The drop results rather from a combination of factors: failure below a technical resistance, too many long positions, less dynamic spot demand, and caution before upcoming US economic statistics.
Altcoins followed the movement, as their lower liquidity generally makes them more sensitive to bitcoin fluctuations and forced closures on derivative markets.
US inflation becomes the next test
Investors are now waiting for the release of the US consumer price index, scheduled for October 14. Inflation higher than expected could strengthen expectations of high rates and weigh on risky assets.
In the short term, the 81000 to 82000 dollar zone serves as the first support for bitcoin. Its break would expose the market to a new downward acceleration, especially if other clusters of long positions lie below this threshold.
A sustained return above 84000 dollars would instead neutralize part of the pressure. BTC should then break 85000 dollars to restart a more convincing momentum.
The wave of liquidations has already removed some of the excess leverage. However, it does not guarantee that the correction is over: the next direction will depend more on actual demand than on bets accumulated on derivative contracts.
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Luc Jose A.
Diplômé de Sciences Po Toulouse et titulaire d'une certification consultant blockchain délivrée par Alyra, j'ai rejoint l'aventure Cointribune en 2019. Convaincu du potentiel de la blockchain pour transformer de nombreux secteurs de l'économie, j'ai pris l'engagement de sensibiliser et d'informer le grand public sur cet écosystème en constante évolution. Mon objectif est de permettre à chacun de mieux comprendre la blockchain et de saisir les opportunités qu'elle offre. Je m'efforce chaque jour de fournir une analyse objective de l'actualité, de décrypter les tendances du marché, de relayer les dernières innovations technologiques et de mettre en perspective les enjeux économiques et sociétaux de cette révolution en marche.
DISCLAIMER
The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.