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What's next for Bitcoin after spike in long liquidations?

  • Bitcoin retraced to two-week lows following a sharp sell-off on Monday.
  • Bitcoin's seven-day volatility remained stable at 1.1% despite heavy liquidations.
  • Bitcoin's short-term holders have begun realizing losses after the recent decline.

Bitcoin (BTC) fell to a two-week low of $111,500 on Tuesday after significant long liquidations triggered panic selling among short-term holders.

Bitcoin remains rangebound as short-term holders realize losses

Bitcoin fell to its lowest level in two weeks on Tuesday, following a sharp sell-off over the past 48 hours and a week of subdued trading.

Spot trading activity reflected the weak momentum, with average daily trading volumes standing at $2.3 billion in the past week, down 12% from the previous week, according to K33 Research in a Tuesday report.

Despite the decline, Bitcoin's volatility remains low. Seven-day volatility stands at 1.1% after dropping to 0.616% on Thursday, marking its lowest level since August 2023. BTC's 30-day volatility also slipped to 1.33%, nearing its yearly lows, mirroring a similar pattern observed in early August.

On the futures side, Bitcoin experienced its fourth-largest long liquidation in 2025 on Monday, with the broader crypto market witnessing $1.6 billion in leveraged wipeouts. K33 Research analysts added that futures leverage remained high despite the heavy liquidations, with open interest holding at 305,000 BTC, down just 2,600 BTC during the sell-off.

Liquidation events often signal market imbalances, with large wipeouts indicating the direction of momentum. The analysts noted that while some long liquidations can mark local bottoms, they more often result in weaker performance afterward.

Following Bitcoin's decline, the short-term holder Spent Output Profit Ratio (SOPR) dropped sharply below 1, indicating that recent buyers are now selling at a loss, according to data from CryptoQuant. Investors moved 30,000 BTC, worth $3.39 billion at $113,000 per BTC, to exchanges at a loss.

https://x.com/cryptoquant_com/status/1970438274717020259

They also highlighted that large holders have also begun experiencing pressure, as new whale addresses realized losses of $184.6 million, while older whales shed $26.3 million during the pullback.

Despite recent market weaknesses, institutional demand for Bitcoin has remained strong. Strategy and Metaplanet have continued to increase their exposure, while spot ETF inflows last week showed that dip-buying remains strong, according to QCP analysts in a note to investors on Tuesday.

Likewise, the Altcoin Season Index has fallen from above 80 to 65, as Bitcoin's dominance rose to 57% and Ethereum's share slipped to 12%, indicating a rotation back into the top crypto.

"BTC has held within the $110k–$120k range this quarter, with vols suppressed as altcoins took the spotlight. Following yesterday's shakeout and with October around the corner, focus is likely to return to BTC," wrote QCP analysts.

Bitcoin trades around $111,600, down 0.7% at the time of publication on Tuesday.

Author

Michael Ebiekutan

With a deep passion for web3 technology, he's collaborated with industry-leading brands like Mara, ITAK, and FXStreet in delivering groundbreaking reports on web3's transformative potential across diverse sectors. In addi

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