BTC liquidation cascade wipes $412M, dips below $66K

• Bitcoin drops below $66K, triggering a $412M liquidation cascade in hours.
• Total crypto liquidations hit $2.29B over the past week amid market volatility.
• Important downside liquidity sits between $63.5K and $65.5K support zone.

Bitcoin fell on Monday morning, briefly dropping below $66,000 and triggering $412 million in forced liquidations in a matter of hours. It was a tough start to the week for traders who had been betting on a continued rally, pushing total crypto liquidations over the past seven days to $2.29 billion. At the time of writing, Bitcoin is trading around $67,360.

What Just Happened

When Bitcoin broke below $66,000, it hit a cluster of leveraged long positions, traders who had borrowed money to bet on Bitcoin going higher. When the price fell through their entry levels, those positions were automatically closed, adding more selling pressure and pushing the price even lower. 

Where Traders Are Looking Next

Analyst CryptoReviewing said that the zone between $63,500 and $65,500 holds a good amount of liquidity below current price levels, meaning there is a real possibility Bitcoin could dip further to sweep those levels before recovering. 

However, he also said that the zone between $66,500 and $73,000 has a far larger cluster of liquidations building up, making a move higher the more likely outcome once the dust settles.

Analyst Ted added another layer to this. A number of traders placed short bets during the recent drop, expecting Bitcoin to continue falling. 

If Bitcoin holds above $66,000 and those traders are proven wrong, they will be forced to buy back their positions to cut losses. That buying pressure could push Bitcoin quickly toward $70,000 to $71,000 before any further downside resumes.

One Analyst Who Stayed Calm

Not everyone was rattled. Analyst Astronomer said he had actually added to his Bitcoin long position during the dip, citing a specific support zone he had been watching called the silver pocket. 

He was clear about his risk management: if Bitcoin closes the daily candle below that zone, he exits and takes the loss. But his base case is that the level holds.

“I’m not bearish here and fully expect it to hold,” he said, adding that he would be watching whether Bitcoin can close the daily candle above Monday’s low as the first sign of stabilisation.

Related: Crypto Market Drops as Bitcoin Falls Below $66K Amid Rising Yields and Geopolitical Risk