Bitcoin (BTC) stayed near two-month lows at the Aug. 18 Wall Street open as markets came to terms with extreme liquidations.
“Drying liquidity” costs BTC price key support
Data from Cointelegraph Markets Pro and TradingView showed BTC price action tracking sideways after a single daily candle spawned 8% losses.
The largest cryptocurrency saw a cascade of liquidations across derivatives markets, with these accounting for an “outsized” majority amid relatively slack spot selling.
“In Deribit it is likely that a large account got wiped, considering the immense short liquidation that occured together,” trading firm QCP Capital wrote in a market update sent to Telegram channel subscribers on Aug. 18.
Analyst: Spot sell volume still 50% below 2023 high
As BTC’s price drifted slowly toward $26,000, market participants diverged over the true nature of the situation and its future implications.
Key Points:
- Bitcoin (BTC) price remained near two-month lows as markets dealt with extreme liquidations.
- The liquidity markets have been drying up over the past few weeks.
- The cascade of liquidations in derivatives markets played a major role in the market downturn.
- Some analysts believe that the spot sell volume is still 50% below the high of 2023.
- Other market participants are more optimistic and see this price dip as an opportunity for a rebound.
Total liquidations challenged those seen in the immediate aftermath of the FTX exchange meltdown — the event that resulted in BTC/USD dipping to two-year lows of $15,600 in November 2022.
Analyst: Spot sell volume still 50% below 2023 high
As BTC’s price drifted slowly toward $26,000, market participants diverged over the true nature of the situation and its future implications.
For popular trader and analyst Rekt Capital, the picture was bleak — a double-top formation for BTC/USD in 2023, and a complete lack of support from trend lines and moving averages during the breakdown.
An accompanying chart showed trading volume on daily timeframes, as Rekt Capital warned that capitulation had likely not yet matched previous sell-offs.
Others were more optimistic, including trader CryptoCon, who identified key two completed tasks common to successful BTC price rebounds during bull market retracements.
These involved relative strength index (RSI) values bouncing at the 0.382 Fibonacci retracement level.
Rekt Capital noted that daily RSI was now at its most “oversold” since June 2022, with only two episodes in Bitcoin’s history, both in bear markets, beating it.
Looking ahead, QCP meanwhile flagged next week’s commentary from Jerome Powell, chair of the United States Federal Reserve, as the next potential source of volatility.
“We believe that a lot now rests on Powell’s speech at Jackson Hle next week,” it concluded.
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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
