Bitcoin’s (BTC) recent drop appeared to have caught investors hoping that the cryptocurrency would find a bottom off guard. Long position liquidations reached their highest level since late January, as BTC extended its losses.
BTC dropped below $40,000 for the first time since mid-March, following signs from the US government that inflation is expected to worsen significantly in the country. Consumer price data for March is expected to come in at its highest in 40 years when it is released later today.
The broader crypto market also slumped, with most of the top altcoins losing between 2% and 8% in the last 24 hours. The whole market capitalization of cryptocurrencies has dropped by $150 billion in the past week and was below $2 trillion once again this year.
$385 million worth of long positions liquidated
The crypto market saw $385 million worth of long positions liquidated in the last 24 hours according to coinglass statistics. Nearly 90% of all liquidations that happened overnight were long, indicating that the majority of traders were preparing for a rebound.
Only $57 million of the $442 million in total liquidations were short. BTC saw longs worth $142 million liquidated, about 87% of total closures. The largest single liquidation order valued at $10 million, was placed on Bitmex.
BTC’s sharp drop from 2022 highs has mostly burned traders who had hoped for a crypto recovery. Long positions were also closed in large numbers last week.
The losses come in line with those broader risk markets, particularly stocks. They emphasize the high amount of correlation between cryptocurrency and equities.
Markets seek a BTC bottom
BTC’s recent drop has sparked speculation over where the losses will stop. Some traders predict that the token’s next support level will be $37,000 to $38,000, while others warn that it might fall as low as $30,000.
BTC’s lowest level this year is around $33,000, which might be regarded as a hard support level. Any drop below that level would likely signal an extended bear market for the world’s largest cryptocurrency.
