Bitcoin fell below $80,000 on Thursday for the first time in over a month, triggering nearly $1 billion in leveraged crypto liquidations. According to CoinGlass data, total liquidations reached $948.22 million across 177,440 traders within 24 hours, with long positions accounting for 90.6% of the losses at $858.96 million. Ethereum led individual asset liquidations with $282.03 million, followed by Bitcoin at just over $200 million. The market drop was driven by hotter-than-expected inflation data: September Consumer Price Index rose 3.7% year-over-year against a 3.6% forecast, while Producer Price Index increased 6.3% annually versus a 5.5% estimate. These figures revived bets on another Federal Reserve rate hike, lifting Treasury yields and strengthening the dollar.
The sell-off extended beyond digital assets, with stocks, copper, and South Korea’s Kospi index falling, while gold rose. Nexo analyst Iliya Kalchev noted that Bitcoin slipped to the bottom of its $81,000 to $87,000 range held since late September. Currently trading near $82,000 after initial volatility, Bitcoin sits roughly 2% below the average cost basis of U.S. spot ETF holders, estimated at $82,300. This places recent ETF buyers underwater, reversing gains from the previous rally where prices closed above this line on 21 of the 24 days since September 21. Technical support levels were breached, with Bitcoin dropping to $79,711 before recovering slightly. Key resistance remains at $81,603, while further downside risks include supports at $78,002 and $75,092.
The simultaneous breach of technical support levels and the repositioning of Bitcoin below the average cost basis of U.S. spot ETF holders signals a critical shift in market sentiment. While macroeconomic factors like rising oil prices and hot inflation data provided the immediate catalyst, the structural damage lies in the erosion of confidence among institutional investors who entered via ETFs. When these holders are underwater, their behavior often shifts from accumulation to defensive selling or stagnation, removing a key pillar of demand that supported the earlier rally. The forced liquidation of long positions exacerbates this by creating a feedback loop where price drops trigger more selling, making it difficult for organic buying pressure to stabilize the market without significant new inflows.
From an Operational Risk perspective, the concentration of liquidations in long positions highlights the fragility of leverage-dependent markets during macroeconomic uncertainty. The fact that 90.6% of liquidated value came from longs indicates that traders were heavily positioned for continued upside, leaving them vulnerable to sudden reversals. For recovery, the market requires more than a technical bounce; it needs sustained positive ETF flows and easing selling pressure from long-term holders. With the Federal Reserve decision approaching on October 28, any hawkish surprise could deepen the correction, whereas a pause might alleviate some pressure. However, until Bitcoin reclaims the $82,300 threshold, the narrative remains one of risk aversion rather than bullish continuation.
