Short-Term Volatility Continues to Hit Bitcoin: Cascading Liquidations

Yesterday, we identified the expected volatility over the short term. As anticipated, the wide range between long and short liquidations provided both the top and the bottom of the market. Almost immediately after I published yesterday's morning note, Bitcoin broke down, triggering a wave of long liquidations at $62,500.

This liquidation had a cascading effect, pushing the price down to $62,000 before bouncing back to $63,200 in the early morning. However, it soon retraced again to the current price of $62,060. For short-term traders, it's crucial to stay aware of the heightened volatility, with 2% moves occurring every few hours.

The next major liquidation level sits at $61,800, where over $125 million worth of BTC longs could be liquidated. Bitcoin is now less than $300 away from this level. If these leveraged longs get liquidated, we could see a short-term bounce before a potential further decline.

That said, this is purely a short-term trend, and our long-term position on Bitcoin remains unchanged, as we continue to see an overall bullish structure. While short-term trends may flip quickly, any downtrend should be viewed as a buying opportunity in line with the long-term outlook.

Stormrake Spotlight: WIF ($2.45)

As the broader market moves slightly lower, WIF has lost 4% on the day. Meme coins, in general, should be considered leveraged bets on Bitcoin and other large market cap cryptocurrencies. Their volatility is unparalleled, and they tend to perform well in bullish, risk-on market environments.

These are not coins you should be DCAing (dollar-cost averaging) into. Opportunities may arise once the market shows a clear bullish direction. Until then, the risk is high, and trades should only be made after conducting thorough research and ensuring you're comfortable with the potential downside.

BTC/USD Key Levels and Price Action:

Bitcoin is currently testing the top CPR line for the fifth time in less than 24 hours, while also falling below all moving averages. A bearish crossover of the 21 and 55 EMA has occurred. The top CPR support sits at $62,060, and if this fails to hold, combined with the potential long liquidations at $61,800, we could see Bitcoin retest the middle CPR support level at $60,800.

BTC Total ETF Flows for 8 Oct: $ - 9.4 million

ETH/USD Key Levels and Price Action:

Overnight, Ethereum remained relatively sideways and did not experience the same volatility as Bitcoin. However, ETH has failed to break above the 200 EMA and is now trading below all major moving averages as well as the middle CPR levels. This weakness is expected to continue, particularly if Bitcoin shows further short-term signs of weakness. While ETH's next significant support level is some distance away, it remains at the red CPR line of $2,260.

ETH Total ETF Flows for 8 Oct: $ - 4.5 million

Written by Alexandar Artis

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