- Long liquidations were significantly higher than shorts after BTC fell below $70,000
- Demand for the currency could decline as sentiment remained negative
The crypto market, led by Bitcoin [BTC], witnessed a tough day at the office on June 7 as prices plummeted. At the time of writing, BTC had lost 2.83% of its value in the past 24 hours while trading at $69,262.
Due to the decline reportedly caused by US jobs data, the total market capitalization fell to $2.55 trillion. This was a drop of 3.48% over a single 24-hour period. As expected, traders were also not immune to the effects of this update, according to data from Coinglass.
At the time of writing the total value was liquidations amounted to $410.42 million. Of this, Bitcoin contracts accounted for $70.73 million.
Source: Coinglass
Liquidations change the position
Crypto liquidations occur when market conditions are unfavorable. As a result, exchanges forcibly close the leveraged positions of traders who can no longer meet margin requirements.
It was striking that a large part of the liquidations that took place within the time frame were longs. For context, longs are traders who bet on a price increase. Therefore, it was clear that many traders were optimistic about Bitcoin’s price since it started trading above $71,000 on June 7.
Moreover, the price drop seemed to have taken place affected the sentiment on the market. Although the weighted sentiment before the flood of liquidations was negative, the value fell further to -0.794.
This decline implied that most conversations about Bitcoin online were leaning towards the bearish side. As such, demand for the coin could be sluggish, suggesting the price could fall back down the charts.
Source: Santiment
If this is the case, the value of BTC could drop to $67,450. However, beyond on-chain activity, a key factor supporting a recovery is the Bitcoin ETF’s overall net flow.
Next week is crucial for BTC
For those unfamiliar, a Bitcoin ETF is a product that exposes investors to the price movements of the financial instrument. However, this does not mean that investors would own BTC directly.
According to crypto investment tracking tools, total net inflows reached $131 million as of June 7. To give details of the outage, reporter Colin Wu noted:
“As of June 7, total net inflows into Bitcoin spot ETFs were $131 million. Grayscale ETF GBTC had one-day outflows of $36.3411 million, and BlackRock ETF IBIT had one-day inflows of $168 million. The total net asset value of Bitcoin spot ETFs is $61.104 billion.”
Source: Sosowaarde
Although the inflows were slightly lower than the previous days, the fact that they were higher than the outflows suggested that BTC could avoid a significant correction. If inflows are higher by Monday, Bitcoin’s price could rise to $71,000 again. If not, the price may fluctuate sideways.
However, another thing that could impact Bitcoin in the coming week is the FOMC meeting. FOMC stands for Federal Open Market Committee. The committee is responsible for setting monetary policy in the United States.
Read Bitcoin’s [BTC] Price forecast 2024-2025
The meeting usually causes market volatility and is scheduled for June 12. If the agency cuts rates, BTC could see a rise in value amid the high volatility. However, a higher rate could contribute to another decline in the crypto’s price.