Bitcoin Drops 2% as Market Liquidations Surge to $200M

Bitcoin has experienced a notable pullback, retreating from its 13-week high of $87,500 to below $85,000, marking a 2% decrease over the past 24 hours. The cryptocurrency is currently trading around $84,135, reflecting a significant shift in market dynamics.

This decline is accompanied by a surge in market liquidations, which have approached $200 million in the last 24 hours. Long position liquidations account for a substantial portion of this total, amounting to $131 million. This indicates that many traders who had taken long positions are now facing margin calls, further contributing to the downward pressure on Bitcoin's price.

Technical analysis reveals that Bitcoin is currently testing a long-standing resistance trendline. The formation of price rejection candles on the 4-hour chart suggests that an extended pullback might be underway. This technical indicator, combined with the recent price action, points to potential further declines.

Market indicators are also turning bearish. The MACD and signal lines have crossed negatively, which is often interpreted as a sell signal in the short term. Additionally, Bitcoin’s open interest has decreased by 4.45%, reaching a low of $52.81 billion in the futures market. The long-to-short ratio shows a subtle rise in bearish positions, now at 0.9861, indicating a growing sentiment of pessimism among traders.

Despite these bearish signals, the funding rate remains positive, currently standing at 0.0051%. This reflects ongoing bullish sentiment toward long positions, as traders are willing to pay an extra premium to maintain their positions. However, this optimism is tempered by the recent price action and technical indicators.

Whale behavior appears to be influencing price action. Analysis suggests that Bitcoin’s inability to break through $87,500 is due to market manipulation. Large blocks of sell orders have appeared on exchange order books, a tactic known as “spoofing.” This involves placing large orders with no intention of fulfilling them, creating artificial resistance levels and preventing upward momentum.

On the institutional front, support for Bitcoin appears to be strengthening. U.S. spot Bitcoin ETFs recorded $165.75 million in net inflows on March 20, marking their fifth consecutive day of positive flows. This influx of institutional capital suggests that despite the recent volatility, there is still significant interest in Bitcoin from large investors.

Looking ahead, the current recovery will likely retest local support near $83,000. A breakdown below this level could push Bitcoin toward $78,350, representing a deeper correction from recent highs. Conversely, a bullish rebound could challenge the resistance trendline again. Based on Fibonacci analysis, a successful breakout could extend to the 61.80% level around $95,350.

The 200-day simple moving average (SMA) and exponential moving average (EMA) sit around $85,000. Bulls are currently attempting to flip these key bull market trendlines to support, which could provide a foundation for further gains. However, the recent price action and technical indicators suggest that this will be a challenging task.

For now, Bitcoin remains in a critical phase. Traders are watching whether it can overcome the apparent resistance at $87,500. The alternative is a deeper correction toward $80,000, where previous buying interest emerged. The outcome of this battle will likely determine the short-term trajectory of Bitcoin's price.