SUMMARY
- Bitcoin dropped nearly 4% to just above $69,000, with the crypto market cap falling by 5.5%.
- The shift from “extreme greed” to “greed” in the Fear and Greed Index hints at potential further price corrections.
In only one day, Bitcoin (BTC) dropped almost 4%, leading to approximately $250 million in bullish bet liquidations as weekend profit-taking sparked a wider market decline. BTC trimmed gains from the beginning of the week as it fell from $72,500 on Thursday to trade above $69,000 early Friday. This dip was mirrored in major cryptocurrencies, which helped the market capitalization as a whole fall by 5.5%.
On Thursday, the Fear and Greed Index, a sentiment gauge that cryptocurrency traders regularly monitor, displayed “extreme greed,” which is a conventional sign of market tops. The index indicated “greed” by Friday, suggesting that prices would continue to decline. Extreme fear indicates possible buying opportunities, whereas “extreme greed” frequently warns of an impending correction. The Index gauges market sentiment to demonstrate when investor emotion influences pricing.
The drop was most severe in futures markets. According to data from CoinGlass, liquidations with losses of $88 million were driven by BTC-tracked futures, followed by ETH futures with losses of $44 million and SOL and DOGE futures with losses of roughly $15 million apiece. Prior to the collapse, around 90% of futures bets were bullish, indicating traders’ anticipation of additional price increases over the weekend, which may have been influenced by optimistic projections related to the November 5 U.S. elections.
When margin requirements are disregarded, liquidations indicate forced closings of overly leveraged deals, a condition that typically exacerbates market fluctuations. Global financial policy changes and positive political sentiment in the United States have fueled market expectations of more Bitcoin growth in recent weeks, with some aiming for $80,000 in the coming weeks. In any event, this wave of liquidations points to a possible market reset, where the sentiment shift may encourage a more cautious stance as the market adjusts.
This week, record open interest in bitcoin futures reached $43 billion, but by early Friday, it had slightly decreased to $41 billion. High levels of trader participation and potential price volatility are reflected in this metric, which measures the total number of outstanding derivative contracts. A series of large-scale liquidations frequently signals a market peak, as overextended bullish positions confront constrained closures. These variables collectively emphasize the potential for continued cost volatility and sentiment shifts ahead.