Cryptocurrency analytics firm CryptoQuant has suggested that Bitcoin may have formed a local bottom following a significant liquidation of long positions in the futures market.
The ongoing downtrend and technical indicators are pointing to potential further declines, but the reduction in selling pressure could signal a short-term recovery, according to the report.
CryptoQuant noted in a statement that over 4,000 BTC long positions were liquidated on Oct. 1, making it the second-largest liquidation event of 2024. Such high liquidation levels typically occur during steep price declines and lead to a sharp drop in the number of contracts purchased, which can reduce selling pressure and balance the market.
“Liquidation of long positions may have created a local bottom,” CryptoQuant noted.
Historically, significant losses and liquidation moments tend to mark local bottoms and present opportunities for a short-term recovery. However, CryptoQuant warned that while the price could remain in its current range in the near-term, continued strength on the buy side will be crucial to reversing the recent decline.
*This is not investment advice.
