Bitcoin traders brace for $1 billion liquidation trap after inflation shock breaks $80,000

Bitcoin's price has dropped below $80,000, falling to $78,725 after hotter-than-expected US inflation data weakened expectations of Federal Reserve interest rate cuts. This decline has pushed traders into a crowded leverage zone, where a further drop could trigger approximately $1 billion in long position liquidations if Bitcoin falls below $78,000. Conversely, a rebound to around $80,458 could put about $640 million in short positions at risk. This volatile range follows Bitcoin's interruption of its recovery from April lows, exacerbated by weakening US demand signals, outflows from spot Bitcoin ETFs, and profit-taking. Analysts note that leveraged long positions are heavily concentrated below $78,000, suggesting that a breach of this level could lead to intensified selling pressure. Meanwhile, spot Bitcoin demand has softened, evidenced by declining Coinbase Bitcoin Premium Index and significant outflows from spot Bitcoin ETFs, totaling over $800 million in recent days. While some institutional investors are reducing exposure, overall investor appetite remains, with month-to-date inflows into ETFs still positive. The immediate downside test for Bitcoin is $78,000, with the 200-day moving average near $82,400 serving as a key resistance level.

(Source：CryptoSlate)