Bitcoin calls 911, $60K support line broken

Bitcoin experienced a sharp fall on Wednesday after breaking below the $60K support level, which had held for a few days in addition to a decline in activity on the Bitcoin network.

According to Coinglass data, the cryptocurrency market experienced almost $321 million in liquidations when Bitcoin dropped below $60K on Tuesday.
If the $58K support level fails, traders are unsure of how far down the price of Bitcoin might go and whether these factors have already been fully priced in. Most of the total liquidations have gone to the long traders, much more than the $35 million short liquidations.

Open interest is the total of open long and short positions in the market that are not yet filled. Lower open interest generally denotes increased caution or liquidations by traders, usually because of declining prices.

The pullback follows a jump on August 25th, according to Santiment statistics, when the exchange’s Bitcoin financing rate hit its highest level since the cryptocurrency’s all-time high in March.

The difference between the futures contract price and the index price is used to calculate funding rates, which are periodic payments that buyers and sellers of perpetual contracts involving cryptocurrencies trade.

After Federal Reserve (Fed) Chair Jerome Powell hinted at a possible interest rate cut in September during his keynote speech, some traders opened long positions in Bitcoin and Ethereum. The latest liquidation, however, indicates that the market took a different turn.

Santiment analysts pointed out that “when funding rates get extreme in either direction, they are always prone to get liquidated and shoot markets in the opposite direction.” traders often monitor the relationship between the US dollar index (DXY) and BTC for market direction. Many think that a surge in Bitcoin always coincides with a weak DXY and vice versa. The dollar index hit a year-to-date low below 101 index points last week, and Bitcoin’s price broke out of the $53K range