BTC price drop driven by high-leverage long liquidations, analysis shows

The recent sharp decline in Bitcoin's price has been attributed to forced liquidations of long positions in the futures market. According to XWIN Research Japan, a contributor to CryptoQuant, the timing of the price drop aligns perfectly with a surge in long position liquidations, indicating that the sell-off was driven by these events. The analysis explains that when the price falls below a key support level, long positions fail to meet margin requirements and are automatically liquidated. This process triggers market sell orders, which in turn intensifies selling pressure and causes further declines. XWIN Research Japan emphasized that liquidations are not merely a result of the price drop but a factor that amplifies it, noting that even a small initial dip can trigger a cascade of further liquidations. In this context, the current price movement should be seen as a structural deleveraging event rather than a collapse in demand. The contributor added that the price will gradually stabilize once most high-leverage positions are cleared. The next step for the market to watch is the scale of the leverage that has already been unwound and whether the market has returned to a more balanced state.