bitcoin bear
$651 million in BTC was liquidated on BitMEX as the bitcoin price plunged $1,500 in several hours. Most major crypto assets dropped 20 percent. | Credit: grejak/Shutterstock.com

According to data published by Datamish, $651 million in BTC was liquidated on BitMEX as the bitcoin price abruptly plunged by more than $1,500 within merely several hours, causing most major crypto assets like Ethereum and EOS to plummet by nearly 20 percent.

$651 million long contractson BitMEX liquidated as the bitcoin price drops $1,500
$651 million long contracts on BitMEX liquidated as the bitcoin price drops $1,500 | Source: Datamish

Liquidation on margin trading platforms like BitMEX describes the process in which traders lose their entire positions that are leveraged, often causing other positions to become liquidated as well.

On Sept. 24, when the bitcoin price dropped by more than 15 percent against the U.S. dollar, leveraged long contracts on BitMEX started become liquidated, causing a cascade of additional liquidations like a domino effect.

Where do traders see the bitcoin price going from here?

DonAlt, a crypto trader and a technical analyst who initially said that the bitcoin price is likely to dip to the mid-$7,000 region once a strong support at $9,650 breaks, expects that a further pullback is likely.

Several hours after the drop to $8,000, the bitcoin price recovered relatively quickly to $8,700 but the trader said that the current range feels like when BTC first recovered from $5,500 when it corrected from $6,000 in December 2018. At the time, BTC ultimately fell to $3,150, establishing a new yearly low.

“A range of 100 days just broke to the downside. If this is a bullish shakeout, it’ll be obvious once BTC reclaims $10k. If this is bearish, I don’t want to be long. Buying this feels like buying $5500 after the $6000 break. Something I’m not willing to do,” he said.

If the bitcoin price can recover to the bottom of a large range at $9,650, there is a possibility that it could bounce to previous levels above $10,000, a key psychological level for investors.

However, if the selling pressure continues to weigh on BTC, the trader emphasized that $7,500 is likely to be the next target.

“Thank you Bakkt for making this market fun again. 8 touches and the lower part of the range gave out. If BTC can reclaim the range, there is hope for a move up. If not I’m looking at 7700-7350 as first significant support,” the trader added.

Coincidentally, the drop in the bitcoin price occurred days after the highly anticipated launch of Bakkt, a bitcoin futures market operated by ICE, the parent company of the New York Stock Exchange.

Many investors expected Bakkt to act as a catalyst for a renewed rally for the bitcoin price. As the provider of the first physically settled bitcoin futures contract in the global market, Bakkt has been described as one of the only few platforms that could have a direct impact on the price of BTC.

Some analysts have speculated that investors may have “sold the news” of the Bakkt launch and others have suggested that Bakkt could have intensified the downward movement as it merely reflects demand from a new market of investors.

Technically weak

Apart from the Relative Strength Index (RSI) demonstrating extremely oversold conditions for BTC, there are not many technical indicators that suggest a large relief rally is likely to happen in the upcoming days.

If BTC begins to demonstrate oversold conditions that match the levels of December 2018 when its price was hovering at $3,150, it is likely that it sees a relatively large jump – especially if it is met with enough demand from the futures market.

This article was edited by Gerelyn Terzo.

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