Bitcoin tests US$73,188: Can the 200-day line stop the slide?

Bitcoin experienced a 1.5% drop to $74,577.82 within a 24-hour period, while the wider crypto market contracted by 1.52% and reached a value of $2.5 trillion. Notably, Bitcoin's performance lagged behind the broader market, displaying an 91% correlation with the S&P 500 over the past week. This decline can be attributed to an increased level of technical deleveraging alongside a macro risk-off trend.

Liquidation data indicates the main cause, with more than $1 billion in leveraged long positions liquidated in 24 hours, with Bitcoin accounting for $224.65 million of this total. Long positions dominated, with over 88% and even up to 96% of them liquidated. The rapid liquidation cycle resulted in a spike of 3,339% in Bitcoin's 24-hour liquidation totals, signifying a sudden and intense wave of forced selling.

This surge reflects a flush of speculative excess and may ultimately pave the way for a more stable market base. The immediate indicator to monitor is the stabilization of Bitcoin's 24-hour liquidations, as a return to normal levels would suggest decreased selling pressure. The average funding rate also plunged by 75%, potentially indicating a decrease in leveraged selling pressure.

Apart from technical factors, traditional risk assets and institutional flows played a role in the downward trend. The Nasdaq shed 5.5% on November 5 due to concerns about AI-sector growth, while Bitcoin's high correlation with tech stocks exacerbated the decline. Furthermore, spot Bitcoin ETFs, including BlackRock's, faced multi-day net outflows, with a reported $104.97 million sale contributing to direct sell-side pressure.

Additionally, regulatory uncertainty surrounding US authorities' actions against MEXC Global and its alleged $16 billion in illicit activity introduced additional risk and may have dampened liquidity and confidence. The outlook for Bitcoin in the near term hinges on a price floor and macro data. Bitcoin has been trading below its key seven-day and 30-day Simple Moving Averages, with its 200-day Simple Moving Average at $73,187.78, acting as a significant support level.

The immediate driver for Bitcoin's decline is the upcoming US October Consumer Price Index report on November 10. A higher-than-expected print could reignite rate concerns and pressure risk assets, while a lower reading might offer some relief. On the market-cap side, the crypto sector has been testing a critical floor between $2.49 trillion and $2.5 trillion, aligning with the 78.6% Fibonacci retracement level.

If Bitcoin manages to stay above this floor and liquidation volumes decline, a short-term rebound might be possible. However, failure to hold this floor could lead to a test of the 200-day moving average near $2.48 trillion. Bitcoin's ability to reclaim the $2.56 trillion, the 78.6% Fibonacci level, and subsequent ETF flow data would provide insight into institutional conviction.

A decisive break below the $73,188 to $74,795 zone could trigger another downward movement, as it is close to both Bitcoin's 200-day level and the market-cap floor, creating a clear line of support. My assessment is that bearish pressure is real but narrower than the headlines suggest, primarily arising from a technical deleveraging event, compounded by thin weekend liquidity and regulatory headlines.

While the long liquidation flush may be nearing exhaustion, the overall trend remains weak until key resistance levels return. Therefore, I would not consider a brief bounce as a trend change; instead, I would wait for liquidation totals to normalize, funding rates to stabilize, and Bitcoin to hold the 200-day Simple Moving Average near $73,188.

Furthermore, I would monitor ETF flows to ensure they do not continue to subtract demand. The macro side is equally crucial, as the 91% correlation with the S&P 500 over the past week indicates that Bitcoin is currently acting as a risk asset. Thus, the upcoming CPI release on November 10 can have more influence than any crypto-specific news.

If inflation data is unexpectedly high, rate fears might reignite pressure on risk assets, making the $73,188 floor test more likely. Conversely, if inflation data is cooler than anticipated, relief could help Bitcoin stabilize and attempt to reclaim the seven-day Simple Moving Average near $77,159. Ultimately, the regulatory headline appears to be a timing issue rather than the root cause.

It made an already crowded trade more vulnerable. A positive rebound can occur without a full trend reversal, and I would treat it as an opportunity to assess whether leverage has truly reset. The decline in Bitcoin combines a macro risk-off event with an internal deleveraging shock. While the liquidation flush may be nearing its end, the overall trend remains weak until key resistance levels return.

The central question is whether Bitcoin can successfully defend its 200-day Simple Moving Average following the US CPI release or whether breaking it would open the door to deeper losses. The market's needs include time and calmer leverage conditions rather than a dramatic catalyst. A calm stabilisation in liquidation totals and funding rates would impact the outlook more significantly than a sudden relief rally.