Bitcoin drops below $6,800, hitting a six-month low

Bitcoin prices fell sharply this morning from $7,700 to below $6,800—an almost 12% drop— hitting a six-month low.

Data from Rekto shows that derivatives exchange BitMEX saw more than $388 million worth of XBT Perpetual Swap contracts liquidated over the past 24 hours, which means that the exchange system has automatically closed a large number of bitcoin levered positions. By publication time, Bitcoin prices have clawed their way back above $7,000.

According to a market brief provided to The Block by QCO, a crypto trading firm based in Singapore, BiMEX Open Interest (OI) has dropped below $700 million following rapid liquidations—an indicator of positioning extremes. The exchange is likely to observe a negative funding rate while futures remain in contango, the brief says.

Although it is possible for Bitcoin to approach the $6,000 level by year-end, the brief adds, right now it is more bullish than bearish. QCP also believes that Chinese retail traders will likely buy on dips if Bitcoin’s prices fell below $7,000.