Bitcoin Price Nosedives to $59,000, Whats the Real Reason？

Story Highlights

• The recent sharp fall has liquidated $9.92 million worth of long positions out of $10.20 million of total liquidation.
• The potential reasons behind this ongoing sell-off are the negative ETF net flow and negative funding rates.
• BTCs daily chart looks bearish there is a high possibility BTC could fall to the $58,000 level.

Bitcoin (BTC) has experienced a free fall to $59,000 from $61,000 after gaining 4% in upside momentum during Asian trading hours. However, the massive fall occurred in the past hours, resulting in $9.92 million worth of long positions being liquidated out of $10.20 million liquidation, according to the on-chain analytic firm CoinGlass.

Why

Bitcoin Price

Looking at the current market conditions, short sellers are highly dominating the market and creating significant selling pressure.

The potential reason behind this ongoing sell-off is the lack of interest from exchange-traded funds (ETFs) traders and CryptoQuant‘s negative funding rates. According to CoinGlass data, this is the second consecutive day that the US spot Bitcoin ETF has registered a negative flow of 1.77K BTC. Meanwhile, BTC’s funding rate currently stands at around -0.002.

Together, this on-chain data indicates bearish sentiment, with short sellers dominating the market. If these sentiments continue and the BTC price falls to the $58,500 level, approximately $421 million worth of long positions could be liquidated.

Bitcoin Technical Analysis and Upcoming Levels

BTCs daily chart looks extremely bearish, and it is also trading below the 200 Exponential Moving Average (EMA) on a daily time frame, indicating it is in a downtrend. With the current price rejection from the 200 EMA, there is a high possibility BTC could fall to the $58,000 level, a crucial support level.

Since August 7, 2024, Bitcoin has been consistently found taking support at this crucial level. If BTC holds this level, there is a high possibility of price reversal. However, if it fails to maintain above $58,000 and closes a daily candle below $57,000, it could fall to $54,000 in the coming days.

BTCs Open Interest and Trading Activity

With a significant price drop of over 3.5% in the last three hours, BTCs open interest has declined by 3.1%, according to CoinGlass data. At press time, BTC is experiencing massive selling pressure and is currently trading near the $59,085 level and has seen a price drop of 0.5% in the last 24 hours.

Meanwhile, its trading volume has dropped by over 30% during the same period, indicating lower participation and increased fear among traders.