Bitcoin Dips to $111k Amidst $1.7 Billion Liquidation Wave → Markets

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Briefing

Bitcoin’s price recently dipped to $111,779, reflecting a 0.7% decline within a broader 1.5% crypto market downturn, triggered by a substantial $1.7 billion liquidation event. This widespread forced selling, the largest daily long liquidation of the year, underscores the market’s vulnerability to excessive leverage and macroeconomic pressures. The event saw over $500 million in Ethereum long positions also wiped out, highlighting a systemic deleveraging across altcoin markets.

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Context

Before this market shift, many investors were keenly watching Bitcoin’s ability to sustain its upward momentum, particularly around the $113,000 → $114,000 level. There was a prevailing question about whether the market was becoming overextended, especially with high open interest in futures contracts. The average person was wondering if the rally would continue or if a correction was due, given the rapid price movements.

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Analysis

This market event was primarily caused by a cascade of liquidations, where overleveraged trading positions were automatically closed due to price drops. Think of it like a row of dominoes → when Bitcoin’s price broke a key support level, it triggered forced sales of long positions, especially in altcoins, which then pushed prices down further, leading to more liquidations. This was compounded by the U.S. Federal Reserve’s stance on “restrictive rates for longer,” which typically makes investors less willing to take on risk. Additionally, liquidity remained on the sidelines, with stablecoin reserves increasing but fewer tokens entering exchanges, indicating a cautious sentiment among both individual and institutional traders.

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Parameters

Bitcoin Price Drop → Bitcoin’s price fell by 0.7% over 24 hours to $111,779.
Total Liquidations → A massive $1.7 billion in long positions were liquidated on September 23 → 24, marking the largest daily long liquidation of the year.
Ethereum Liquidations → Over $500 million in Ethereum long positions were also liquidated.
Key Support Level Breach → Bitcoin breached the $113,000 → $114,000 support zone.
Stablecoin Reserves → Stablecoin reserves increased to $308 billion, indicating sidelined capital.

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Outlook

Looking ahead, market participants should closely monitor Bitcoin’s ability to reclaim the $113,000 level, as this could signal a short-term sentiment flip. The upcoming $22.6 billion options expiry this Friday is another critical event that could introduce significant volatility. Additionally, the release of U.S. GDP data on September 25 will be important, as a weak economic print could potentially rekindle expectations for rate cuts and offer some relief to digital assets.

The recent $1.7 billion liquidation event highlights the crypto market’s sensitivity to leverage and macro signals, urging caution for investors.

Signal Acquired from → binance.com