Bitcoin Drops 4% to $102,000 Triggering 2,200 BTC Long Liquidations

Bitcoin has been trading within a narrow range of $103,000 and $106,000, struggling to maintain upward momentum since reaching a local high of $108,000 a week ago. Over the past day, Bitcoin experienced a sharp decline, hitting a low of $102,000, which resulted in massive long liquidations.

According to CryptoQuant analyst Axel Adler, Bitcoin’s long liquidation dominance has surged from 0% to 10% over the past week. Despite this surge, Bitcoin continued to trade within the narrow range. This increase in long position liquidation without a sharp price crash indicates sustained buyer support in the market.

Typically, a surge in long position liquidations suggests that investors betting on price rallies are being forced out of the market. The spike was particularly extreme over the past day as prices dipped to a low of $102,000. Notably, Bitcoin’s long liquidations hit 2,200 BTC, the highest level of the past week. This suggests that the market experienced panic selling alongside forced closures as prices continued to decline.

When long positions are liquidated in such a manner, short positions take over the market, resulting in a negative Funding Rate. This indicates that traders are aggressively betting on prices to drop even further.

As of the latest update, Bitcoin was trading at $103,763, implying that prices have stopped falling, presenting the market with risky positions. Under these circumstances, if long liquidation dominance rises by another 5–7%, there will be a high probability of washing out bears. A higher dominance ratio could see bears kicked out of the market if a reversal emerges, marking a turning point and indicating a reversal in futures market sentiment in favor of bulls.

Therefore, after prices recovered from a recent dip, the next plausible thing to expect is a short squeeze. Buyers started to return to the market as demand for shorts surged, as evidenced by a positive Taker Buy Sell Ratio. The demand for shorts will cause organic demand for Bitcoin, and the king coin can reclaim $104,577. The downside can only resume if sellers return to the market, resulting in another drop towards $102,000.