Bitcoin Drops to Three-Week Low Following $20 Billion Liquidation Event

Bitcoin (BTC) has plunged to its lowest levels in three weeks, reeling from the aftermath of a massive $20 billion market liquidation. The broader cryptocurrency market remains on edge, with analysts cautioning that further declines may still be on the horizon.

Largest Liquidation Event Sparks Market Downturn

On November 11, reports emerged that Bitcoin and prominent altcoins were grappling with the ripple effects of one of the largest liquidation events in cryptocurrency history. The leading digital asset struggled to recover from multi-week lows, as market participants interpreted the sell-off as the prelude to a broader “purge” designed to flush out overly bullish sentiment stemming from the last bull market.

As the dust settled, BTC experienced sustained selling pressure over the weekend, testing critical support levels near $100,000. The fallout was a direct consequence of the record-breaking $20 billion liquidation event, which sent shockwaves through the market.

Is a Crypto Market Purge Underway?

Bitcoin is currently hovering around its three-week low, as seen on the Bitstamp exchange, with recovery efforts stalling amid severe market pessimism. Adding to the downward pressure, macroeconomic concerns such as intensifying U.S.-China trade tensions have further dampened investor confidence in risk assets.

Traditional markets mirrored the crypto slump, with the S&P 500 index tumbling 2.7% last Friday. Meanwhile, gold—a traditional safe-haven asset—surged past $4,000 per ounce, underscoring a shift in investor sentiment toward less volatile options.

From a technical perspective, Bitcoin's Relative Strength Index (RSI), a widely monitored indicator, has dipped into "oversold" territory, hitting levels unseen since February, when trade wars first rattled financial markets.

Skew, a prominent cryptocurrency trader, observed that many traders with short positions have been forced to unwind their bets in a sequential manner. Sharing insights on X (formerly Twitter), Skew indicated there’s some passive buying activity occurring on Coinbase spot markets. “While spreads remain wide, there’s potential for liquidity conditions to improve,” the trader concluded.

Notably, the volatility has exposed certain vulnerabilities within major exchanges, with Skew highlighting ongoing challenges during such turbulent times.

Another trader, Roman, struck a more pessimistic tone, expressing skepticism about recent bullish momentum and speculating that the market could still slide further. “This is not the bottom,” Roman cautioned on X. He went on to predict that more than $30 million worth of altcoins—mostly low-quality or fraudulent projects—will eventually face elimination in an industry-wide purge.

Liquidation Volume May Be Higher Than Reported

The historic-scale liquidations have primarily affected traders banking on the continuation of the crypto bull market, with CoinGlass reporting approximately $20 billion in liquidations over the past 24 hours. A significant portion of these liquidations came from long positions.

However, CoinGlass noted that the true liquidation volume could be even higher due to reporting inefficiencies. “For instance, Binance only records one liquidation order per second,” the platform pointed out, suggesting that some data might not fully capture the extent of the sell-off.

Order book data also reveals a fragile market environment. Sell walls remain concentrated around the $120,000 mark, while support at $100,000 appears weak and vulnerable to further testing. Analysts from Cointelegraph have projected that BTC could potentially re-test $108,000, marking the lower limit of its current support zone.

The unfolding situation leaves market participants bracing for further turbulence as the cryptocurrency market grapples with this unprecedented liquidation event.

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