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Though the recent price correction of Bitcoin has caused some concern, it is a relatively controlled shakeout in comparison to earlier liquidation cascades. Although the price has fallen from the $110,000 range to about $103,000, as of press time, liquidations on significant exchanges such as Binance have remained remarkably contained, with no long position worth more than $200 million being wiped out.
This suggests a more planned correction as opposed to a sell-off triggered by panic. Technically speaking, Bitcoin is now trading close to its 100-day moving average after breaking below its 50-day EMA. Bulls and bears will engage in short-term combat on these two levels.
The 200-day EMA or $98,000 is the next significant support if Bitcoin is unable to hold above $103,000. If sell pressure subsides, there may be a bounce. A glaring liquidity gap between $105,000 and $103,000 can be seen by examining the CoinGlass footprint chart and heatmap. Sellers quickly took advantage of this area as strong downward movement replaced thin order books.
Interestingly, the red-highlighted box shows a spike in short-term volume and a drop in open interest, indicating that leveraged long positions were flushed out, albeit not disastrously. The lesson in general? This was not a historic long squeeze. Instead, after weeks of erratic price movement, we were probably witnessing a market recalibration.
The lack of significant liquidation events indicates that investors are less willing to take on risk and that leverage is not yet at dangerously high levels. Unless a fundamental catalyst appears, Bitcoin might keep consolidating between $98,000 and $105,000 in the future. For the time being, the market seems to be absorbing the decline without completely caving in, but any prolonged move below $100,000 could signal a more serious test of sentiment.
One encouraging indication is the absence of severe liquidations. Despite the pressure on Bitcoin, the market is still operating within typical volatility bounds, providing traders with a window of stability before the next significant move.