Bitcoin Experiences Significant Drop Amid Liquidations and Market Pressure

Bitcoin experienced a significant drop of almost 5% during a sudden sell-off on Sunday, as it failed to break key resistance levels. The price of Bitcoin plummeted from around $91,500 to approximately $86,950 on Coinbase within just three hours, leading to a wave of liquidations across the market.

According to Cointelegraph, this decline came after Bitcoin had closed the previous week at $90,411, marking the first green weekly candle in four weeks. The sell-off resulted in over 180,000 traders being liquidated, with total liquidations reaching $539 million, predominantly affecting long positions in Bitcoin and Ether.

Analysts from Kobeissi Letter noted that the market is still in a structural bear phase, and attributed the sharp decline to a sudden increase in selling volume, which triggered a domino effect of liquidations.

CoinDesk reported that the liquidations were concentrated in the early Asia trading hours, with nearly $646 million in leveraged positions wiped out across major exchanges. Notably, Binance, Hyperliquid, and Bybit recorded significant liquidations, each exceeding $160 million.

The market's volatility was exacerbated by thin liquidity and ongoing macroeconomic uncertainties. As Bitcoin struggled to hold its ground, the monthly MACD indicator flashed red, signaling a potential continuation of bearish trends, similar to patterns observed in previous market cycles.

The sell-off was also linked to rising bond yields in Japan, which recently spiked to 1.01 percent, the highest in 17 years, prompting traders to unwind yen-funded carry trades that have bolstered risk assets throughout the year.

This shift in macroeconomic sentiment contributed to a risk-off environment, affecting not only Bitcoin but also other cryptocurrencies like Ether, which fell over 6% to near $2,815. The outlook for Bitcoin remains cautious, with analysts emphasizing the need for vigilance in the face of potential downside volatility.

Support levels for Bitcoin are closely watched, with initial support cited around $84,500, and a break below this level could expose further declines towards earlier lows from April and 2021. Overall, the combination of forced liquidations, macroeconomic pressure from rising Japanese bond yields, and bearish technical indicators has created a challenging environment for Bitcoin and other cryptocurrencies.