• Bitcoin dropped by over 3% in the past hour, to hover above the $65,000 mark, after a surge in long liquidations.
• Despite the downturn, analysts say that an increase in the bitcoin apparent demand metric signals the potential for a sustained Q4 price rally.
• The crypto market experienced $63 million in liquidations across centralized exchanges in the past hour, with Bitcoin accounting for almost $15 million of those liquidations.
The cryptocurrency market experienced significant volatility over the past hour, with major coins like Bitcoin seeing sharp declines. This price drop came alongside a dramatic increase in long liquidations across major exchanges.
The Bitcoin Price Falls Over 3%
Bitcoin, the largest cryptocurrency by market capitalization, fell by over 3% in the span of one hour. This brought the price down from above $65,000 to hover just above $63,000.
According to data from Coinglass, there were nearly $15 million in bitcoin liquidations in the past hour. The majority, around $12 million, were long positions.
Exchanges See $63 Million in Total Liquidations
Across major centralized exchanges, the total liquidations in the past hour amounted to $63 million.
Bitcoin led the way with its nearly $15 million in liquidations, but other major cryptocurrencies saw significant liquidations as well.
The spike in long liquidations came unexpectedly after a period of relatively low volatility in the crypto market.
Increased Leverage Preceded the Liquidation Event
Some analysts note that the surge in leverage through bitcoin futures may have been a precursor to this liquidation event.
Earlier this year, a similar rise in open interest preceded a 22% decline in bitcoin’s price.
However, there are also key differences compared to previous cycles. Traditional exchanges now lead open interest, with more sophisticated institutional investors participating. There has also been a shift toward more stable, cash-margined futures contracts.
Metrics Point to Increased Bitcoin Buying Demand
Even with the liquidations, some on-chain metrics reveal growing demand for bitcoin that could support prices.
One key metric, bitcoin’s “apparent demand,” recently saw its fastest monthly increase since April. This signals a rise in relative demand compared to inventory changes.
Inflows into spot bitcoin ETFs also hit 2022 highs this week. Meanwhile, the bitcoin realized cap, which measures invested capital, reached its highest level since May.
Sustained demand could help lead bitcoin’s price back toward its all-time highs later this year, according to analysts.
Conclusion
The past hour saw significant volatility hit the crypto markets, led by a surge in long liquidations. Bitcoin dropped 3%, though metrics suggest underlying demand remains strong. Further price recovery may depend on whether this demand persists through Q4.
