Bitcoin (BTC) Price Makes a Turnaround to Close the Week, What's Next?

The price of Bitcoin hasn’t quite started the month as widely expected, falling to around the $60,000 mark on Thursday, October 3rd.

Bitcoin’s price has failed to begin the month on a high note, dropping to around the $60,000 level on Thursday, October 3. This bearish movement is said to have been sparked by the rising tensions in the Middle East after Iran fired missiles into Israel.

But, the premier cryptocurrency appears to be making a recovery to close out the week, bouncing back above $62,000 on Friday. The latest on-chain observation reveals that this recent recovery seen with the Bitcoin price is linked to decreasing selling pressure.

4,000 Long Positions Liquidated On October 1 — What’s Next?

In a new Quicktake post on the CryptoQuant platform, an analyst known as Caueconomy discussed the effects of the recent liquidations of long positions in the Bitcoin futures market. According to the analyst, the ongoing liquidations have reduced the bearish pressure on the Bitcoin price.

For those unaware, futures allow investors to speculate on the price of a particular asset (Bitcoin, in this scenario) in the future. A long position is taken when a BTC trader buys a futures contract, predicting the coin’s price to rise at a later date. The trader incurs a loss when the asset’s price falls below the purchase price specified in the futures contract.

As per data from CryptoQuant, over 4,000 long positions were liquidated following the latest price decline on Tuesday, October 1, marking the second-largest liquidation event this year. While liquidations indicate heavy selling activity and investor losses, they can also signal crucial shifts in the market sentiment.

The CryptoQuant analyst noted that periods of heavy losses and market liquidations often lead to the formation of local price bottoms. “During significant price declines, the number of contracts purchased tends to drop sharply due to liquidations, which reduces selling pressure in the market,” Caueconomy said.

Moreover, the analyst went on to say that the Bitcoin price may be gearing up for a short-term recovery thanks to the decreasing selling pressure. However, Caueconomy highlighted the need for increasing buying strength from the investors for the Bitcoin price to fully recover.

Bitcoin Price At A Glance

It does appear like the Bitcoin price established a local bottom around the psychological $60,000 level before a pivotal rebound. At the time of writing, the premier cryptocurrency trades around the $62,000 mark, reflecting an over 2.5% increase in the past day.

However, this single-day performance has not been enough to wipe Bitcoin’s 5% price decline over the past week. With selling pressure dropping and the positive price history in October, though, it seems like only a matter of time before the flagship cryptocurrency returns to $65,000.