Bitcoin News Today: Bitcoin's 2.63% drop triggers $140.06M long liquidations in $585M crypto market sell-off

More than half a billion dollars in leveraged long positions were erased from the crypto market as Bitcoin plunged below $116,000 on Friday, triggering a wave of liquidations. Derivatives data from CoinGlass showed $585.86 million in total long position liquidations across the sector, with Bitcoin alone accounting for $140.06 million of losses after the asset fell 2.63% to $115,356. Ether (ETH) followed suit, wiping out $104.76 million in longs as its price dropped 1.33% to $3,598 over the same period [1].

The sell-off extended to smaller-cap assets, with Dogecoin (DOGE) leading the charge among top 10 cryptocurrencies by market capitalization. Nansen reported a 7% decline in DOGE’s price to $0.22 over 24 hours, resulting in $26 million in long position liquidations. Across the entire crypto market, 213,729 traders were liquidated during the period, according to CoinGlass, which tracked $731.93 million in total position losses. The sharp reversal came just weeks after Bitcoin hit an all-time high of $123,100 on July 14, creating a volatile environment for traders who had positioned themselves for continued bullish momentum [1].

Despite the selloff, market sentiment remains skewed toward optimism. The Crypto Fear & Greed Index recorded a "Greed" score of 70 in its latest update, suggesting traders have not fully recalibrated their risk appetite following the downturn [1]. However, technical indicators paint a more nuanced picture. The 50-day exponential moving average (EMA) currently sits at $110,589, marking a critical support level for Bitcoin. Analysts note that a sustained close below $116,000 could force the price to retest previous lows, potentially exacerbating liquidations [1].

Derivatives data highlights growing bearish positioning. Short positions now dominate the market, accounting for 53.1% of open interest, while the long/short ratio of 0.88 suggests a heightened risk of a short squeeze if prices stabilize. On-chain metrics offer mixed signals: a net outflow of 11.7K BTC from exchanges indicates institutional accumulation, yet retail participation remains subdued, with new unspent transaction output (UTXO) creation levels mirroring those seen in late 2024 [1].

The divergence between institutional and retail sentiment has created opportunities for altcoins. Ethereum’s open interest dominance has risen to 38%, and its perpetual trading volumes have surpassed Bitcoin’s for the first time since 2022. Meanwhile, smaller-cap tokens like Solana and XRP have seen $18 billion in open interest growth over July, though leverage levels now exceed the +2 standard deviation threshold for 12 consecutive days—a fragile state prone to sharp corrections [1].

Strategic shifts are emerging as traders navigate the post-consolidation phase. Institutional investors have reallocated capital toward Ethereum and Solana, leveraging technical advancements and ecosystem developments. Retail investors, meanwhile, face a deteriorating environment, with weighted sentiment metrics dipping below -1.03 and the Social Dominance Index falling to 27%—signs of waning retail-driven demand [1].

The path forward hinges on Bitcoin’s ability to reclaim the $120,000 threshold. A successful retest could reignite momentum for altcoins, but a breakdown below $116,000 risks triggering a broader selloff. For now, market participants are bracing for further volatility, with technical indicators and derivatives data offering conflicting signals that underscore the sector’s inherent uncertainty [1].

Source: [1] [Bloodbath for crypto longs as Bitcoin tumbles below $116K] [https://coinmarketcap.com/community/articles/68830aaeb0543364aa5f6426/], [Bitcoin's $116K–$120K Consolidation and the Implications ...] [https://www.ainvest.com/news/bitcoin-116k-120k-consolidation-implications-altcoins-2507/]