Bitcoin’s recent price slide has triggered over $250 million in liquidations, with market sentiment indicators showing “extreme greed”—a sign that often precedes corrections. The cryptocurrency market, experiencing high volatility, faced a 5.5% drop in overall capitalization, impacting Bitcoin and other major tokens.

$250 Million in Bullish Liquidations

Bitcoin (BTC) saw a nearly 4% price drop over 24 hours, falling from $72,500 on Thursday to just over $69,000 by Friday morning. This downturn led to significant bullish liquidations as investors took profits ahead of the weekend. According to data from CoinGlass, Bitcoin futures alone accounted for $88 million in losses, while ether (ETH) futures faced $44 million in liquidations. Traders who had bet on rising prices ahead of November’s U.S. elections suffered, as nearly 90% of all futures bets were bullish.

Fear and Greed Index Hits “Extreme Greed”

The popular Fear and Greed Index, which gauges market sentiment, hit “extreme greed” levels on Thursday. Historically, such peaks have indicated local market tops, often followed by corrective movements. By Friday, the index had receded slightly to “greed,” suggesting a potential for further corrections. The index highlights a trend where extreme fear signals buying opportunities, while extreme greed often points to upcoming sell-offs.

Bitcoin’s open interest—representing the value of open contracts—reached a record high of over $43 billion earlier this week but dropped to just above $41 billion by Friday. This shift often signals a turning point, as large-scale liquidations can prompt a price reversal. The liquidations underscore a highly speculative environment, with traders potentially overleveraging amid bullish sentiment.

Wider Market Retreat as Correction Looms

Bitcoin’s downturn caused ripples across the broader crypto market, with other major tokens like Solana (SOL) and Dogecoin (DOGE) following suit, each seeing nearly $15 million in liquidations. The weekend profit-taking follows weeks of price gains fueled by positive economic and political sentiment, with some traders anticipating Bitcoin’s rise to $80,000. However, the recent wave of liquidations and sentiment indicators suggest a market at risk of correction, potentially dampening short-term gains for traders.

Bitcoin soared past $71,000 on Tuesday, marking a significant 5% gain within 24 hours and crossing a critical resistance level. This rally, spurred by increased buying activity among major traders or “whales,” comes just a week before the U.S. elections—a potential catalyst that many in the crypto community believe could benefit Bitcoin regardless of the political outcome.

Short Liquidations Skyrocket

Bitcoin Price Chart | Source: CoinMarketCap

As Bitcoin breached the $70,000 mark, many traders betting on a price drop faced substantial losses. A staggering $176 million in short positions were liquidated, with Bitcoin and Ethereum short traders suffering losses of $88.89 million and $39.73 million, respectively. This wave of liquidations highlights the volatile market environment as traders pivot amid heightened demand.

Strong Buying Demand from ETFs and Whales

Large-scale buying interest continues to come from Bitcoin exchange-traded funds (ETFs), which have seen inflows of around 47,000 BTC over the last two weeks. Much of this activity has been observed on Binance, particularly during Asian trading hours, suggesting a robust demand from high-volume players looking to capitalise on potential future gains.

Following Bitcoin’s lead, other cryptocurrencies experienced notable gains. Dogecoin jumped 15%, while Shiba Inu saw an 8% increase. Ethereum gained nearly 5%, with Cardano, Solana, and BNB Chain all climbing by over 3%. The broader market optimism underscores the anticipation around the U.S. election and the overall positive sentiment surrounding crypto assets.

Traders Eyeing $75,000 Target

With the November elections on the horizon, options traders are focusing on a potential $75,000 price target for Bitcoin. As traders weigh the election’s impact on traditional markets, many see a favourable environment for Bitcoin’s growth regardless of the outcome, cementing optimism that new highs may be in sight.