Bitcoin Extends Decline to Multi-Year Low as Market Watches for Short Covering
The Bitcoin price crash rattled traders early Thursday as BTC plunged 5% in a matter of minutes, touching $58,000, its weakest level since 2024, before clawing back to around $59,400, still down 2.5% on the day. The damage wasn’t contained to bitcoin alone. Ether slid to roughly $1,550, a drop of 5.5%, while solana and dogecoin posted similarly steep losses as the selloff spread across the broader crypto market.
The timing wasn’t random. Tech stocks had a mixed session, with chipmaker Micron surging on strong earnings while most of mega-cap tech dragged the Nasdaq down 0.4%. Investors are also still digesting last week’s hawkish surprise from the Federal Reserve under new Chairman Kevin Warsh, who signaled that the next policy move is far more likely to be a rate hike than a cut, and possibly sooner than markets had priced in.
Despite the grim headline number, the structure beneath this Bitcoin price crash tells a more interesting story. Liquidation data shows the bulk of risk sitting above current prices rather than below, meaning a further drop is unlikely to trigger a cascade of forced selling. Instead, traders holding short positions are the ones exposed.
Open interest actually rose about 0.28% over the past 24 hours even as price fell roughly 3%, suggesting traders aren’t closing shorts, they’re adding to them, betting on a deeper break below $58,000. Negative funding rates back this up, showing the market is paying a premium just to stay short.
Order book data adds more weight to the bullish case. There’s roughly $409 million in buy orders sitting between the current price and $50,000, compared to just $93 million in resting sell orders up to $70,000, a lopsided setup that traders often interpret as fuel for a sharp reversal once overcrowded short positions start unwinding.
History suggests that when a trade gets this one-sided, sharp operators tend to push price in the opposite direction, forcing shorts to cover and triggering exactly the kind of squeeze that could send bitcoin snapping back just as fast as it fell.
