Bitcoin and the broader crypto market extended a slide for a second day, with forced liquidations totaling $2.65 billion within 24 hours. Market analysis indicates this is a structural downturn rather than a mere shock, as liquidity tightness and deteriorating investor sentiment weigh on prices. Bitcoin has fallen about 10% since President Donald Trump’s election, erasing prior gains, while CoinGlass data shows long positions at roughly $2.2 billion as liquidations surge. The current dynamics echo strains seen after the 2022 FTX collapse, underscoring persistent market fragility.
Technical observers note the move is not just a short-term hiccup; the market faces ongoing downside risks amid liquidity pressures and leverage unwind. Peter Brandt cites the Bitcoin Power Law model, suggesting a minimum support near $42,000 that could contain further losses if it holds. If this level remains intact, investors may dodge a prolonged bear market and position for a more cautious recovery.
Glassnode reports Bitcoin’s capitulation index has surged to its second-highest level in two years, signaling intensified forced selling and elevated market stress. Such massive liquidations tend to dampen leverage and heighten near-term volatility, yet they can also lay the groundwork for new buying opportunities over time. Economist Daniel Lacalle argues that deleveraging, while painful, could unlock powerful investment opportunities for discerning entrants. While the path to a rebound remains uncertain, observers are watching closely for signs of recovery following the recent liquidations.
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