On the 15th of October, the crypto markets were hit by a $957.77 million wave of liquidations.
Notably, long positions accounted for 91.7% of the total, reflecting widespread forced selling. Over the last 24 hours, $878.07 million in leveraged longs were wiped out amid concerns over hotter-than-expected inflation and fears about Federal Reserve policy.
The U.S. Department of Labor reported that the annualized increase in consumer prices was up 3.7% in September. This created more pressure on optimistic traders.
Ethereum [ETH] accounted for the largest share at $292.83 million, while Bitcoin [BTC] trailed it closely at $203.01 million. Both of them accounted for over 50% of the total liquidations.
However, BTC held above the $83,000 support level for some time before dropping to nearly $80,000. It later recovered to $81,000, where it traded at press time. This suggests that traders had already priced in much of the shock.
Bitcoin tests $80K support after the liquidation
The $203.01 million in liquidation has put Bitcoin’s market structure at risk and pushed the price downward near $81k. The previous support area for leveraged buyers was at $83,000.
However, Bitcoin broke below this level and failed to return above the upper end of the range at $84,300-$84,500.
In other words, this failure indicates that continued selling from forced liquidations will outweigh buying attempts. As such, if a strong reversal does occur, it would imply that buyers have absorbed nearly all the selling pressure and could lead to a move upward toward $82,500.
Instead, if a sell-off occurs, it could trigger additional stop-loss selling and potentially drop prices down to levels as low as $78,000, further extending the effects of the recent liquidation.
Historical performance of Bitcoin provides some optimism, though. In an email to AMBCrypto, Matt Mena, Senior Research Strategist at 21Shares, stated that the average daily return for Bitcoin seven days after higher-than-expected core CPI since 2023 was 1.21%.
Mena believes that the price of Bitcoin can reach back up to $85,000 and possibly even $90,000. This is if the macroeconomic environment becomes clearer, but the current price level of $81,000 still represents vulnerability.
Hotter CPI puts Bitcoin’s recovery at risk
September’s higher-than-expected CPI reading has created a fresh challenge for investors who remain optimistic about Bitcoin’s near-term outlook, particularly those expecting monetary easing in the coming months.
Headline CPI rose 3.7% year-over-year, while Core CPI increased 2.6%. However, inflation surprises have not always translated into significant losses for Bitcoin.
Now attention turns to forthcoming Producer Price Index (PPI) data and the Federal Reserve’s October meeting. Depending upon how these events play out, a reduction in macroeconomic uncertainty could help Bitcoin challenge the $85,000 resistance.
Consequently, renewed rate concerns may delay its recovery.
Final Summary
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Crypto markets saw $957.77 million in liquidations as hotter inflation triggered selling.
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Bitcoin [BTC] risks $80K support as Fed decisions shape recovery toward $85K.
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