Bitcoin drops to $77,000 as $547 million in leveraged longs liquidated

Bitcoin fell from $79,500 to $77,000 on Aug. 22, triggering $547 million in leveraged long liquidations before buyers stepped back in.

Analyst P4 Provider flagged $79,000 as key resistance after Bitcoin swept liquidity above that area, pointing to bearish RSI divergence, rising USDT dominance and elevated funding rates as signs of correction risk.

U.S. spot Bitcoin ETFs recorded $307.45 million in net inflows on Aug. 21, extending their inflow streak to five consecutive days, while BTC traded around $77,291, down 0.43%, at the time of writing. The continued ETF demand provides support for BTC, but the failed breakout above $79,000 leaves the market vulnerable to another pullback.

The next test comes Aug. 26, when the U.S. Bureau of Economic Analysis releases the second estimate of Q2 GDP and July PCE inflation, followed by Fed Chair Kevin Warsh's Jackson Hole keynote on Aug. 28.

On-chain analyst Maartunn attributed the sharp drop to heavy positioning among traders betting on higher prices. Once Bitcoin moved into the liquidation zone, forced selling accelerated the decline. Maartunn said liquidity is now building above $78,300, while additional liquidity clusters extend lower toward $68,000, leaving leverage as one of the main risks for Bitcoin's next move.

The liquidation cascade unfolded across major exchanges in minutes, with forced sales pushing prices lower and triggering the next wave of margin calls. Total crypto futures open interest has hovered between $48 billion and $51 billion, with Bitcoin futures alone accounting for roughly $24 billion of that exposure, according to Coinglass.

P4 Provider's downside levels range from $77,000 to $71,000, with $70,000 identified as a deeper target if selling pressure increases. The analyst advised traders to protect profits, use tight stop-losses and wait for clearer buying opportunities.

The advance estimate showed the U.S. economy growing at a 1.5% annualized rate in Q2. A softer inflation reading could strengthen expectations for easier monetary policy, while a hotter-than-expected reading could pressure risk assets including Bitcoin and Ethereum, which has rallied toward $2,500 on $512 million in ETF inflows.

Nvidia is scheduled to report second-quarter results on Aug. 26 after the U.S. market close, with results and guidance likely to influence broader technology stocks and risk appetite. A strong report could support the current market rally, while weaker-than-expected results could add pressure to equities and spill over into crypto.

For Bitcoin, holding the $77,000 area could keep the recovery intact, while another rejection near $79,000 could expose BTC to deeper support levels identified by analysts.

This article is for informational purposes only and does not constitute investment advice.