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Bitcoin's (BTC) price dropped unexpectedly below the $60,000 mark, leaving investors and analysts scrambling to decipher what might have triggered the move.
Bitcoin, the first and largest cryptocurrency, temporarily fell below $60,000 for the first time in more than a month as volatility rose ahead of the halving event scheduled for April 20.
The largest cryptocurrency plummeted to a low of $59,648 on Wednesday before paring its losses. Bitcoin is already down nearly 15% from its record high of $73,750 on March 14.
Recent market data suggests that a significant factor contributing to the BTC price decline may be a wave of liquidations of long positions triggered by excessive leverage. As prices fell, leveraged positions were forced to liquidate, resulting in a cascade of sell orders that increased the downward pressure on Bitcoin's price.
Bloomberg speculates that Bitcoin's recent slump may have been accelerated by a wave of liquidations in long bets on digital assets. Last Friday, almost $780 million in bullish cryptocurrency wagers were liquidated within 24 hours.
According to CoinGlass data, with the current BTC decrease, $251 million in positions were liquidated across the board, with long bullish bets accounting for $173 million of this total.
With a large number of long positions being liquidated, selling pressure grew, resulting in a further price decline. This, in turn, sparked additional liquidations, resulting in a spiral that dropped Bitcoin's value below the $60,000 level.
At the time of writing, BTC had slightly recovered, trading 0.85% higher in the last 24 hours to around $62,700 as buyers rushed to buy the dip. As reported by crypto analyst Ali, over 27,700 BTC, worth around $1.72 billion, have moved into accumulation addresses (these have never spent funds) as the Bitcoin price fell.
With the leverage on the crypto market flushed out with the latest sell-off, the long-term outlook for Bitcoin remains largely bullish, according to certain market participants.