Bitcoin price dropped to an intraday low of $82,734, erasing early-month gains. Despite forced long liquidations, open interest remained steady, signaling aggressive new short positioning by traders.
Key Takeaways
- Bitcoin dropped below $83,000, wiping out October gains and sparking $693M in total crypto liquidations.
- Liquidation of $637M in long bets shifted market positioning toward net short sellers.
- Bitfinex expects bitcoin to consolidate between $81,300 and $86,500 ahead of the Oct. 14 CPI report.
Surrendering Key Support
Bitcoin continued to slide Wednesday, dipping below $83,000 amid a marketwide pullback that dragged several high-cap altcoins down by 4% or more. The top cryptocurrencys retreat has erased nearly all of its month-to-date gains, casting fresh doubt on whether the “Uptober” rally will materialize.
As shown by the daily price chart, bitcoins price has been under pressure since Tuesday afternoon, when it last traded above $86,000. Initially, the price appeared to hold above $85,500 before shedding $1,500 in less than 20 minutes to land above $83,800. Although it quickly reclaimed $84,000, it could hold this range only until around 4 a.m. ET.
Shortly afterwards, a steady decline pushed bitcoin to an intraday low of $82,734 at 9:45 a.m., its lowest point since Sept. 28. By 1:00 p.m., despite recovering above $83,000 and trending upward, the cryptocurrency remained down nearly 3% over 24 hours.
The downward price action led to a more than 10-fold spike in liquidated long positions and a drop in wiped-out short bets. As shown by Coinglass data, liquidated long Bitcoin bets reached nearly $175 million versus the $13 million recorded 24 hours earlier, while short bets were capped at about $10 million.
Bitcoin‘s latest reversal follows a third failed attempt in a fortnight to break decisively above the $87,722 yearly open or move above the dense cost-basis cluster between $85,000 and $86,500. Initially, the rejection did not trigger a liquidation surge, but after Wednesday’s reversal, total crypto futures liquidations spiked to $693 million over the past 24 hours, with long positions accounting for $637 million.
Aggressive Short Positioning Takes Over
According to the latest Bitfinex Alpha intelligence update, roughly $300 million of those long liquidations came within an hour as the price broke below the $84,000 floor. Still, the Bitfinex update notes that open interest remained stable during the liquidation event, which signals aggressive fresh position-building as the existing longs were forced out.
“Measured in bitcoin, open interest (OI) across major perpetual venues rose just 0.5% on the morning of October 7 compared with October 5. Stable OI during a significant liquidation event signals aggressive fresh position-building as existing longs are forced out,” Bitfinex said in the update.
In addition, funding rates suggest much of that new positioning came from short sellers: Average annualized funding across major venues has edged lower, but remained positive within a narrow band of 5% to 6.5% throughout the week. Unlike the leverage resets of late September and Oct. 2, positioning has remained but turned net short in aggregate. This, according to Bitfinex, leaves two paths forward:
“If BTC holds $84,000, late short positions become trapped below this key level. A rise in spot demand could push them offside and could carry price back towards the yearly open or through it.”
“If BTC holds $84,000, late short positions become trapped below this key level. A rise in spot demand could push them offside and could carry price back towards the yearly open or through it.”
On the flip side, sustained trading below $84,000 leaves shorts in profit and shifts the burden of support entirely to spot demand.
Looking ahead, Bitfinex said it anticipates range-bound consolidation between $81,300 and $86,500 heading into the Oct. 14 U.S. consumer price index (CPI) report, with repeated retests of $84,000. On the other hand, moderate exchange-traded fund (ETF) inflows and negative perpetual funding suggest aggregate positioning is leaning short, setting up potential squeeze conditions while $81,300 holds.
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