The Shocking 10% Bitcoin Crash: What Happened?
Bitcoin’s value recently plummeted by over 10%, dropping below $81,000 before stabilizing around $82,300. In just 24 hours, this drop triggered more than $1.7 billion in liquidations, with Bitcoin accounting for nearly $800 million of long positions being liquidated. But there’s more to this story than meets the eye. Was the crash caused by leverage, or was there something deeper?
How It All Started
The warning signs began on Bitcoin’s daily chart as it printed the largest red volume candle since December. This signaled a massive selling pressure where sellers outnumbered buyers significantly. Unlike previous corrections where buyers swiftly stepped in, this time Bitcoin broke below a critical $84,600 support level. The downward spiral intensified as Bitcoin entered a critical on-chain zone monitored by long-term investors.
UTXO Realized Price Distribution: A Key Metric
One critical tool analysts used to evaluate Bitcoin’s drop is the UTXO Realized Price Distribution (URPD). URPD highlights levels where Bitcoin has historically been bought and sold, acting as major support or resistance zones. Two significant clusters were evident around the $84,600 level. When Bitcoin breached this area, long-term holders began to sell aggressively, contributing to the market’s instability.
Why Long-Term Holder Actions Matter
Glassnode data shows that on January 29, the net position of long-term Bitcoin holders dropped by over 144,684 BTC in just 30 days, marking the largest monthly outflow in recent months. Long-term holders selling near these price clusters added downward pressure. Despite appearances of overall market stability with metrics like positive Hodler Net Position Change, the internal market dynamics showed otherwise.
Reactions in the Derivatives Market
It’s important to note that while many blamed the crash on derivatives, the actual weakness originated in structural selling by experienced holders. Once the $84,600 support was broken, leveraged long positions became vulnerable. A chain reaction of nearly $800 million in Bitcoin long positions was liquidated, accelerating the price drop further.
The Technical Picture: Head and Shoulders Formation
The technical analysis reveals a bearish head-and-shoulders pattern, suggesting a potential further decline of around 12%. This puts the next significant support near $75,000 if selling pressure continues. For Bitcoin to stabilize and potentially recover, regaining the $83,300 and $84,600 levels is critical — these zones remain key imprints of prior market activity.
What’s Next for Bitcoin?
The $81,000 level now serves as key support. If it holds, buyers might step in, potentially stabilizing the market. However, without reclaiming the critical $84,600 resistance level, any recovery remains fragile. Investors should stay cautious and consider the ongoing volatility before making any investment decisions.
Expert Tip: Stay Updated on Market Insights
To gain deeper insights into the crypto market and avoid getting blindsided by significant market moves, subscribing to high-quality resources like Binance Academy or BeInCrypto newsletters can be helpful. Staying informed is your key to making smarter decisions in today’s fast-moving financial landscape.
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