Bitcoin (BTC) stayed near two-month lows at the Aug. 18 Wall Street open as markets came to terms with extreme liquidations.
“Drying liquidity” costs BTC price key support
Data from Cointelegraph Markets Pro and TradingView showed BTC price action tracking sideways after a single daily candle spawned 8% losses.
The largest cryptocurrency saw a cascade of liquidations across derivatives markets, with these accounting for an “outsized” majority amid relatively slack spot selling.
“In Deribit it is likely that a large account got wiped, considering the immense short liquidation that occured together,” trading firm QCP Capital wrote in a market update sent to Telegram channel subscribers on Aug. 18.
Bitcoin liquidations composite chart. Source: QCP Capital
QCP, like others, noted that the market reaction to the alleged trigger — a write-down of SpaceX’s $373 million BTC holdings — appeared exaggerated.
“This brought back the 2021 and 2022 ghosts of Elon-driven tops and bottoms, and we certainly hope the market will not revert back to those times again,” it continued, referring to previous Bitcoin sales and accompanying comments from Elon Musk, joint CEO of SpaceX and Tesla.
Total liquidations challenged those seen in the immediate aftermath of the FTX exchange meltdown — the event that resulted in BTC/USD dipping to two-year lows of $15,600 in November 2022.
“This feels like yet another sign of the drying liquidity markets have seen over the last few weeks,” financial commentary resource The Kobeissi Letter added in part of its own reaction.
Analyst: Spot sell volume still 50% below 2023 high
As BTC’s price drifted slowly toward $26,000, market participants diverged over the true nature of the situation and its future implications.
Related: How low can the Bitcoin price go?
For popular trader and analyst Rekt Capital, the picture was bleak — a double-top formation for BTC/USD in 2023, and a complete lack of support from trend lines and moving averages during the breakdown.
“BTC formed its Higher High at ~$31000 on inclining volume. But price formed the second half of its Double Top on…