Bitcoin's $83K long flush: Blip or a crack in the $100K year-end case?
About $696 million in mostly long bets were wiped out as Bitcoin fell from $86,600 to $83,000. Here's what the Fed, ETF flows and options say about $100K.
Nic Tse
Key Takeaways
- Roughly $696 million in long crypto positions were liquidated in 24 hours.
- Bitcoin fell from about $86,600 to below $83,000, while ETH, XRP, DOGE and ADA witnessed deeper corrections.
- Traders now see an October Fed hike as unlikely, but price in a December hike at roughly 75% to 85%.
- December options still show confidence at the $100,000 strike, though spot demand looks thin.
Bitcoin (BTC) spent the past two weeks trying to clear its late-September high near $87,350. But about $696 million in crypto positions were forcibly closed in the last 24 hours.
More than $400 million in long positions were wiped out overnight. Altcoins fell harder: Ether (ETH) dropped about 6% to $2,564, XRP 6% to $1.42 and Dogecoin and Cardano more than 8%. ETH took an extra hit after BitMine's Tom Lee said the company would soon stop buying ETH.
A leverage flush, with a weak spot underneath
After repeated runs at $87,000, open interest and funding rates had built up on the bullish side, so a modest dip forced a wave of automatic sell orders that pushed price lower still.
According to Glassnode, BTC’s spot market still looks fragile, making a sustained move above $85,000 difficult. ETF flows tell the same story. US spot BTC funds took in $118.9 million on Tuesday, but early data for Wednesday showed about $277 million leaving, led by Fidelity and Ark. Over the past 30 days the funds have still added about $2.2 billion, SoSoValue data show.
October may prove to be less of a shock. December is a question mark.
The 10-year Treasury yield climbed above 5.3%, its highest in more than two decades, as oil prices jumped and the dollar firmed. Minutes from the Fed's September meeting, released October 7, added to the pressure: most officials thought another rate hike would be appropriate before year-end.
Markets have split the two remaining meetings. After a weak September jobs report and softer inflation data, CME FedWatch puts the chance of a hike at the October 28 meeting at around 17% at the time of writing, leaving a pause as the clear favorite.
FedWatch priced a hike at the December 9 decision at between 78% and 84% this week, while prediction markets sit closer to 72% to 75%. For BTC, the October meeting is now less of a threat than the run-up to December, when higher rates and yields could keep pressure on an asset that pays no interest.
Is $100K still in play?
The options market hasn't given up on it. Traders have stacked large call positions at the $80,000, $85,000 and $100,000 strikes for December expiries, with calls making up about 61% of total BTC options open interest. Those positions predate Wednesday's drop.
Reaching $100,000 from $83,000 by year-end would take a gain of roughly 20% in under three months, with a likely Fed hike in the way. Clearing out overcrowded long bets can leave a market on firmer footing, as it did after earlier flushes this year.
But a cleaner market still needs fresh buyers; right now spot demand and ETF flows are the parts of the picture that look weakest.
Bitcoin price: Levels to watch
Level | Notes |
|---|---|
Immediate resistance ($85,500) | The level BTC needs to reclaim first to suggest the flush is over. |
Range high ($86,500 to $87,350) | Tuesday's high and the late-September peak. A daily close above $87,350 would break the six-week ceiling. |
Support ($81,700 to $83,300) | The zone where buyers are clustered and where it’s close to the average cost of ETF holders near $82,000. |
Deeper support ($80,000 to $80,300) | The round number and the area of the 50-day moving average. |
Next downside zone ($75,000) | The next significant cluster if the $81,700 area gives way. |
On the OG.com prediction market platform, traders priced breaking the $85,000 mark at 20% by October 10. Most believe that BTC will stay above $81,000 by the same deadline, at 93%.*
*These prediction market positions are based on the time of writing.
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