- Bitcoin price dropped suddenly as longs liquidations jumped.
- Conflux, Arbitrum, and Mina Protocol were among the top laggards.
- Technicals suggest that this drop will be temporary.
Cryptocurrency prices dropped sharply on Wednesday as longs liquidations jumped in key exchanges. Bitcoin, the biggest coin in the world, dropped below $30,000 for the second time this week. Ethereum price dropped to a low of $2,000 while BNB coin fell below $330. Popular altcoins like Conflux, Arbitrum, and Mina were the worst performers.
Why cryptocurrency prices dropped
It is unclear why Bitcoin and other altcoins plunged suddenly. A likely reason is that investors started to take profits considering that most of these coins have jumped sharply this year. BTC is already up by more than 80% this year while some tokens like Injective and SingularityNET have risen by over 300%.
Another likely reason is that the US dollar index (DXY) has jumped this week. It rose by 0.15% on Wednesday to $101.60, which is higher than this month’s low of $100. Further, American stocks have dropped this week as banks publish mixed financial results.
Read more: How Bitcoin works.
Meanwhile, data compiled by CoinGlass shows that many buyers have been forced to liquidate their positions. Ethereum longs have liquidated coins worth over $41 million while shorts have liquidated just $1.2 million.
The same is true in the Bitcoin market, where longs have liquidated positions worth over $30.5 million and shorts over $3.9 million. A liquidation happens when exchanges like Bitcoin and OKX forcefully closes leveraged trades that are making losses.
So, is this the start of a new bearish run? In the past few days, we have seen Bitcoin struggle to move above the psychological level of $30,500. This is a sign that many traders are still cautious about investing in the coin.
However, this is not an indication that BTC will continue falling in the near term. We often see this volatility when Bitcoin moves to a key resistance point.
Bitcoin price prediction
On the daily chart, we see that the BTC price has been in a tight range in the past few days. In this period, it has moved slightly above the 23.6% Fibonacci Retracement level. The coin is being supported by the 25-day and 50-day moving averages and the Ichimoku cloud. It has also formed an inverted head and shoulders pattern.
Therefore, Bitcoin price will likely bounce back in the next few days as buyers target the key resistance point at $36,000, which is the 38.2% retracement level.
