Key points

  • Bitcoin fell from Monday’s high of $84,250 to $80,951 between 00:00 and 01:00 UTC (02:00-03:00 CEST) on Tuesday, then climbed back above $83,000 by 03:00 UTC, per Kraken.
  • The level to watch is $84,000-$84,250, Monday’s high and the top of this week’s range.
  • A sustained break below Tuesday’s $80,951 low would put the 8 Oct low near $80,300 and Friday’s $80,000 options strike back in play.

Korea’s main index fell 5.5%. Bitcoin finished the Asian session higher than it started.

The largest cryptocurrency slid 3.9% from Monday’s $84,250 high to $80,951 shortly after midnight UTC, according to Kraken hourly data. It then recovered to about $83,350 by 12:30 UTC, about 2% above Monday’s $81,737 close. Ether moved the same way: down to $2,406.71, then back to about $2,503.

What drove it

The trigger was outside crypto. South Korea’s Kospi closed down 5.5% at 6,035.35 after chip stocks sold off, according to Yahoo Finance data, and Nasdaq futures slipped. On Monday, Brent crude touched $107.25 after strikes on Ukrainian energy sites and a tanker fire near the Strait of Hormuz, Cointelegraph and Crypto.com reported.

Leverage did the rest. Crypto liquidations reached $812.26 million over 24 hours, about 84.3% of them longs, according to CoinGlass data quoted by BeInCrypto at 09:53 UTC. Put simply, a liquidation is an exchange closing a leveraged position because the trader’s margin has run out; when many longs are closed at once, the forced selling can deepen a drop. More on how liquidations work.

Monday’s sell-off had already cleared about $771 million, with $685.6 million in longs, The Block reported, citing CoinGlass.

Flows and derivatives

US spot bitcoin ETFs lost $65.4 million on Monday, all of it from BlackRock’s IBIT, according to Farside Investors. Every other fund reported no flow. Ether funds lost $85.4 million, $75.1 million of it from ETHA, per Farside. The week to 9 Oct had seen $678.9 million leave bitcoin funds.

Derivatives look calmer than the headlines. Deribit’s DVOL index, a measure of 30-day implied volatility, was 37.8 at 12:00 UTC, almost exactly where it stood 24 hours earlier. Deribit’s perpetual funding rate stayed slightly positive, at about 0.01% per eight hours. Traders paid to stay long even after the flush.

The levels

The level to watch is $84,000-$84,250. Bitcoin has failed there on Sunday and Monday. A sustained break below $80,951 would undo Tuesday’s rebound and bring the $80,000-$80,300 zone back into view: the 8 Oct low and the biggest strike in Friday’s Deribit expiry, as set out in our week-ahead calendar.

The next test is the US consumer price index for September, due on Wednesday at 12:30 UTC (14:30 CEST), per the BLS. Economists expect headline inflation to rise to 3.7%, CoinDesk reported.

The other view

Tuesday’s bounce may say more about equities than about crypto’s strength. CoinDesk described bitcoin as “decoupling” from Korean stocks, but it also noted that high oil prices raise the case for Fed rate increases, which would weigh on crypto. A hotter CPI print would test that decoupling quickly.

Watch $84K, not the headlines.

As of 12:30 UTC, BTC is trading near $83,350.

This article is for information only and is not investment advice.