Bitcoin Plummets 5% Below $85,000 as Strategic Reserve Order Sparks $261M Liquidations

Bitcoin's price plummeted below $85,000 during the early Asian trading hours on Friday, as the market reacted to the executive order signed by the President to establish a Strategic Bitcoin Reserve. The announcement, aimed at solidifying Bitcoin's role in the nation's economy, sparked significant volatility, with liquidations exceeding $250 million in the past 24 hours.

On Thursday, the President signed the executive order, but contrary to expectations, the market's response was far from bullish. Traders rushed to offload their holdings, triggering a decline in Bitcoin's value. During the early Asian trading hours on Friday, Bitcoin plummeted to a low of $84,667. While its price has since rebounded slightly, the leading cryptocurrency is still down 5% in the past 24 hours.

This price decline has triggered a wave of liquidations in Bitcoin's futures market, totaling $261 million in the past 24 hours. On-chain data reveals that most of these losses come from long positions, indicating that traders anticipating a price rally were caught off guard by the sudden downturn. Long liquidations happen when traders with long positions are forced to sell the asset at a lower price to cover their losses as the price declines. This usually occurs when the asset’s price falls past a certain threshold, forcing traders betting on a price increase to exit the market.

Moreover, Bitcoin's open interest has declined, highlighting the decline in trading activity since the executive order. At $50 billion as of this writing, it has plummeted 5% in the past 24 hours. An asset’s open interest measures the total number of outstanding derivative contracts that have not been settled. When it drops alongside a declining price, traders are closing positions rather than opening new ones. This suggests weakening market conviction among Bitcoin holders and hints at the likelihood of an extended decline.

Bitcoin's decline comes just hours ahead of a highly anticipated crypto summit scheduled for later today. If demand stalls and the downtrend continues, the coin’s price could again retest the support formed at $85,357. If the bulls fail to defend this level, the coin could extend its decline in the coming days and fall toward $80,580. However, a bullish resurgence would invalidate this bearish projection. If new demand enters the market