Crypto whale faces $28 mln WBTC liquidation: Will this affect Bitcoin?

• Bitcoin whale to potentially face liquidation of $28M WBTC.
• The price action shows price is set for further decline.

Bitcoin’s [BTC] recent price action continued to frustrate traders as uncertainty loomed over the “king of crypto.”

While other cryptocurrencies faced similar declines, BTC was especially affected by whale activity.

One prominent whale risks liquidation of 488.45 WBTC, worth $28M, on Compound [COMP], with a health rate of 1.07 and a liquidation price at $50,429.

This whale was liquidated three times during the 2022 crash, totaling 74,426 cWBTC worth $32.82M. The current liquidation orders below $50,429 could drive the Bitcoin price toward this level.

Source: Lookonchain

More BTC levels to be liquidated

The broader Bitcoin market is at risk of further liquidation. Notably, sell-side liquidations are projected to hit $1.07B around the $50K mark, with an extra $500 million expected below $55,000.

A three-month heatmap revealed high liquidity levels on both sides of the market, with long liquidations near $45K and short liquidations around $72K.

Traders should avoid leveraged positions as the market could move sharply in either direction to capture liquidity.

Source: Coinglass

After rejecting the $60K level, Bitcoin’s price may decline further, potentially picking up liquidity below $50K before making a reversal to the upside.

What’s next for BTC?

On the 4-hour timeframe, Bitcoin has repeatedly failed to break above the 200-day exponential moving average (EMA) in recent weeks.

This suggested that BTC could face additional downward pressure. Prices are often attracted to liquidity resting above or below key levels.

Whether BTC trades above or below its moving averages offers insight into market strength or weakness.

Bulls need to reclaim these moving averages to trigger a bounce, but sentiment indicates that the price might drop further as more liquidity is concentrated at the psychological $50K level.

Source: TradingView

History shows a return to a balance zone

Historically, Bitcoin tends to return to a balance zone, offering potential for future price growth.

The Euphoria Zone metric suggests that the ATH of the previous cycle typically becomes the low for the next rally.

Other metrics like the market value/realized value (MVRV) ratio show BTC is heading toward a balance zone, a critical level from which price historically bounces.

Source: Checkonchain

Although Bitcoin hasn’t reached these levels yet, analysts predict BTC could dip below $50K, gather liquidity, and then rise to new highs, possibly by late Q4 2024 or early Q1 2025.

Read Bitcoin’s [BTC] Price Prediction 2024–2025

Bitcoin’s price action and ongoing liquidations point to potential volatility in the near future. As liquidity builds below key levels, BTC could decline further before experiencing a substantial rebound.

However, if Bitcoin follows historical patterns, it will likely rebound, setting the stage for a higher price surge as liquidity strengthens.