5 October 2024
A CryptoQuant analyst known as “caueconomy” recently published a post indicating that Bitcoin (BTC) may have reached a local bottom. The analyst points to a significant liquidation event as a key sign that a short-term recovery could be on the horizon.
Although caueconomy acknowledged that Bitcoin has been going through a period marked by bearish price sentiment and technical indicators suggesting potential further decline, the analyst also highlighted that emerging signs may indicate a stabilization in the asset’s price.
How Is BTC Long Liquidations Suggesting Local Bottom?
The post by caueconomy on the CryptoQuant QuickTake platform titled “Liquidation of long positions may have established a local bottom” sheds light on how long-position liquidations in the futures market could influence Bitcoin’s price.
Caueconomy elaborates that in the face of notable price declines, long contracts bought on future exchanges tend to experience sharp reductions due to mass liquidations.
This process, in turn, diminishes the selling pressure that often exacerbates price drops, potentially setting the stage for a recovery in the asset’s price in the short term.
On October 1st, over 4,000 BTC long positions were liquidated, marking the second-largest liquidation event of 2024 based on data compiled by CryptoQuant.
The analyst mentioned that such significant liquidation events often indicate potential market reversals or local bottoms, as the selling pressure from these positions is removed from the market.
However, caueconomy points out that it is crucial to keep a close eye on the buying strength to gauge whether it can offset the decline and facilitate recovery.
The analyst advises that although the current range may be sustained in the short term, the potential for upward movement is contingent on renewed buying interest and market activity.
The analyst concluded in the post:
At this point, the price is likely to sustain the current range in the short term, but it will be necessary to watch the buying strength to be able to recover the decline.
Is there Any Sign Of Buying Interest In Bitcoin Currently?
So far, Bitcoin appears to be seeing a gradual rebound in price registering a 3.5% increase in the past day to reclaim the $62,000 mark.
At the time of writing, the asset currently trades for $62,238. This increase in BTC has been reflected in the overall crypto market, with the global crypto market cap now up by 2% in the past day to a current valuation of 2.26 trillion.
Meanwhile, a renowned crypto analyst known as Ali on X recently reported a form of Bitcoin buying interest ongoing on an exchange.
In a post uploaded earlier today on X, Ali pointed out that there has been a surge in the Taker Buy/Sell Ratio on OKX, the fourth-largest cryptocurrency exchange by 24-hour trading volume.
There was a spike in the #Bitcoin Taker Buy/Sell Ratio on @okx! This indicates a surge in aggressive buying — a sign of upward momentum ahead! pic.twitter.com/QgZ9qkhSls
— Ali (@ali_charts) October 4, 2024
This spike in the ratio indicates an increase in aggressive buying activity within the market, a potential sign of renewed upward momentum. Such behavior often reflects increased confidence from buyers, hinting at the possibility of a price recovery or a new upward trend.
Featured image created with DALL-E, Chart from TradingView