Bitcoin Drops Over 5% as 240,000 Liquidated in Crypto Market, but Still Poised to Reach $87,000

TradingKey - Crypto market turmoil triggered liquidations of 240,000 traders as Bitcoin tumbled over 5%; however, high-level consolidation leaves the bullish structure intact.

On November 6, Bitcoin (BTC) abruptly faced severe profit-taking and massive liquidation selling pressure right after reclaiming the $80,000 mark, plunging more than 5% on the day and sliding intraday to $75,100. A cascading deleveraging event ensued across the derivatives market, with nearly 240,000 traders forcibly liquidated across the network within 24 hours, bringing total liquidations to as much as $1.2 billion.

Over the past two days, the Democratic Party swept Congress in the U.S. midterm elections, exerting broad downward pressure on U.S. equities. The Nasdaq plunged more than 5% in a single day, while Japanese and South Korean stock markets triggered circuit breakers amid crashes, sending global institutional capital into emergency risk-off mode. As U.S. and Asian stocks plunged, some cross-asset hedge funds chose to prioritize selling highly liquid spot Bitcoin to meet margin calls, dragging Bitcoin down in tandem.

Despite the sharp short-term volatility, the macroeconomic and positioning foundation supporting Bitcoin's medium-term push toward $87,500 remains solid. Historically, the uncertainty premium dissipates quickly once voting in the U.S. midterm elections concludes. Following past U.S. midterms, safe-haven capital has tended to flow back into risk assets and scarce assets from November to December.

In addition, while other risk assets fell through key support levels to hit six-month or even year-to-date lows, Bitcoin did not break below its September low. Today, Alex Thorn, head of research at Galaxy, posted on X: 'On a day of intense market volatility, Bitcoin showed remarkable resilience, still closing above its 50-week moving average.'

Bitcoin price chart, Source: TradingView

In the coming trading sessions, if Bitcoin reclaims and firmly holds above the $80,000 level on strong volume, it will not only turn resistance back into support, but this strong performance could also attract capital from equity markets into the crypto space. Notably, the post-election short-term sell-off was primarily driven by contagion from panic in U.S. equities rather than any deterioration in Bitcoin's fundamentals; therefore, the current market condition can be viewed as an attractive window to accumulate on dips in tranches for a medium-to-long-term push toward the $87,000 target.