Bitcoin Tests Key Support After $640M Liquidation Event

Bitcoin’s recent price action has put the cryptocurrency’s bull market structure to the test, with the digital asset falling to a five-month low of $98,900 before buyers emerged to push prices back above $101,000. According to analysis from Crypto Onchain and on-chain data provider CryptoQuant, Bitcoin lost the critical $107,000 support level after approximately 130 days of trading in a band between that level and $123,000. This breakdown represents a significant technical development that market watchers are treating as a potential inflection point for the ongoing rally.

The move below $107,000 sparked heavy liquidations in the derivatives market, with approximately $640 million in long positions wiped out over a 24-hour period. This liquidation event ranks as the second-largest daily long liquidation since June 2021, surpassed only by the October 10 event which remains the largest on record. The cascade of forced position closures amplified selling pressure, particularly among highly leveraged traders, creating a feedback loop that intensified the intraday drop to levels not seen since late 2023.

Traders are now closely monitoring the $101,000 level, which has taken on heightened significance as the lower trendline of a long-term ascending channel that has supported Bitcoin’s price action since October 2023. Market analysis from Crypto Onchain indicates that bulls stepped in near $98,000 and pushed the market back toward this crucial technical boundary. The defense of this channel bottom would be interpreted as a bullish signal, while a decisive close below it could signal deeper losses and a break in the market structure that has underpinned the rally.

Adding to the technical complexity, a nearby gap on the CME futures chart sits between $92,000 and $93,000, roughly 10% below current price levels. Historical patterns show that Bitcoin has often filled such gaps before resuming its next leg higher, making this zone a potential target if bearish pressure continues. However, strong buying interest around the $101,000 zone could halt any further slide and force prices back toward recent resistance levels.

The rapid rebound from $98,900 to $103,400 demonstrated underlying demand at lower price levels, though market participants remain cautious about whether this buying interest can be sustained. Volume and near-term momentum will be critical factors in determining the durability of this demand. The most important signal for traders will be Bitcoin’s daily close relative to the ascending channel’s lower trendline around $101,000, with a sustained close above that mark likely to be viewed as a buying opportunity.

Beyond technical indicators, broader market factors are also influencing Bitcoin’s trajectory. Market participants are monitoring movements in US equities and large trader activity, both of which contributed to triggering the recent pullback. The interplay between traditional markets and cryptocurrency continues to be a significant factor, with correlations between asset classes potentially exacerbating or mitigating Bitcoin’s price movements in the coming sessions.

Despite the recent volatility, Bitcoin’s year-to-date gain remains close to 10%, though this represents a significant pullback from the all-time high of $126,300 reached in October. The current market environment presents a critical test for the bull market thesis, with the outcome likely to determine whether Bitcoin can resume its upward trajectory or faces a more substantial correction toward the CME gap near $92,000-$93,000.