Bitcoin Rebounds After $359M Liquidation, Holds Above $86,000

Bitcoin has shown remarkable resilience, maintaining its position above key support levels despite a significant $359 million long liquidation event. This event, which saw nearly $360 million in long positions liquidated within an hour, did not result in a sharp downward price spiral. Instead, Bitcoin quickly rebounded and traded around $86,000, indicating strong buyer support and a lack of panic selling.

According to data from CryptoQuant, the substantial long liquidation was a necessary step to correct overheated derivatives positions. This adjustment highlights the market's need for healthy fluctuations and suggests that spot market participants remain steadfast despite over-leveraged traders facing losses. The liquidation event appears to have corrected overheated derivatives positions, potentially paving the way for more sustainable upward movements.

Another encouraging signal comes from the Realized Price – UTXO Age Bands chart. At the time of writing, Bitcoin was above the short-term realized price for the 1-day to 1-week cohort at $86,000 and the 1-week to 1-month cohort at $84,000. These levels often act as support zones for short-term holders. As long as Bitcoin maintains its position above these price bands, it implies that strong hands are stepping in, validating buyer conviction. However, a breakdown below these levels could signal a shift in sentiment and trigger a wave of short-term profit-taking.

From a technical analysis perspective, Bitcoin’s 50-day Moving Average remains an important pivot. The price has recently bounced off this level and is trending above it, with the Relative Strength Index (RSI) sitting at around 50, indicating a closeness to oversold conditions. Moreover, the MACD line remained above the signal line, albeit with narrowing divergence, a possible sign of consolidation before the next leg up. A retest of the $90,000 psychological level appears likely if momentum picks up again.

Bitcoin’s resilience after liquidation and its ability to remain above key realized price levels highlight strong demand. However, cautious optimism is necessary, as Bitcoin requires sustained momentum and higher volume to break out of its range. If buyers successfully protect short-term support zones, the next bullish movement could already be unfolding.