Bitcoin [BTC] traders faced liquidations on both sides as prices surged and then erased the rally.
On the 4th of November, Bitcoin climbed from $75.7k to $81.2k, triggering $407.92 million in liquidations. Shorts accounted for $309.98 million of that total.
The reversal on the 5th of November brought another $323.54 million in liquidations, including $294.11 million in longs. Meanwhile, total crypto Market Capitalization fell $132.7 billion that day, bringing losses since the local peak to $149 billion.
Short-term bullish sentiment following the midterm election results was immediately overrun by an equities market pullback, with major AI stocks coming under selling pressure.
Bitcoin volume trends show crypto isn’t exhausted, merely reactive
In a post on X, Glassnode observed that crypto traders are still here, despite the past month’s price retrace from $87k. Bitcoin [BTC] volume was at its lowest since 2023, before the August rally from $60k commenced.
Thereafter, volume remained above the August levels, which underlined sustained interest from traders and investors.
Rather than being a market collapse, the recent sell-off might be part of a healthy correction. Crypto intelligence platform Santiment posted that the crypto crowd became optimistic following the election results on the 4th of November.
This was a surprise, evidenced by the amount of short liquidations. Fueled by liquidations and FOMO, BTC briefly climbed past $81k.
Short-term FUD in reaction to selling in traditional markets across the globe sparked the Bitcoin reset. In both instances, the price went against the crowd’s expectations, showing why retail trader sentiment extremes can be counter-signals.
Bitcoin slips below key support level
Crypto analyst Axel Adler Jr. wrote that the short liquidations reached the highest levels since late September. The Binance heist has also severely affected sentiment.
Since July, short-term holder BTC supply has expanded by 600k. It highlighted coins changing hands from long-term investors to newer market participants, and can also signal increased sensitivity to short-term price trends.
The True Market Mean was at $77.6k, and the brief foray above this level did not last. The metric measures the average cost basis of active investors while filtering out lost, dormant, or long-inactive coins.
A price slip below the TMM implied cooling market conditions and left investors at a loss on average. It could be a warning sign of a deeper correction.
Final Summary
- The Bitcoin crowd expectations were punished over the past two days, leading to heavy liquidations and high volatility.
- The volume trends were not comparable to the August slump, but losing the TMM suggested the market has reverted from bullish expansion to value-accumulation conditions.