Bitcoin’s price has been a bit sluggish lately, after a recent attempt to reach new all-time highs. It took a pretty big hit on June 20th, dropping below $103,000 for a short time, along with the rest of the crypto market. But some analysts think this might actually be a good thing.
A Look at the Numbers
CryptoQuant analyst Amr Taha points out some interesting on-chain data. A huge chunk of overleveraged Bitcoin long positions (meaning bets that the price would go up) on Binance, the biggest crypto exchange, got liquidated – meaning they were automatically sold off because the price dropped too low. This amounted to over $160 million!
This liquidation coincided with a massive drop in Bitcoin’s “Net Taker Volume” on Binance. This metric shows the difference between buying and selling volume. A negative Net Taker Volume means more selling than buying. This is the third time in June that it’s plunged this low, reaching almost -$100 million.
Why the Negative Net Taker Volume?
Taha suggests two main reasons for this negative volume:
- Forced Liquidations: The price drop forced many leveraged long positions to close, flooding the market with sell orders.
- Panic Selling: Some retail investors might have panicked and sold their Bitcoin to avoid further losses.
Is This Bad News? Maybe Not.
While this all sounds pretty scary, Taha argues that these liquidations could actually be positive in the long run. He believes it clears out excessive leverage and sets the stage for more stable price action. With less risky leverage in the market, the price might be more likely to go up.
Current Bitcoin Price
At the time of writing, Bitcoin is trading around $103,450, down slightly over the past 24 hours.
