Crypto liquidations surge amid stock market downturn

The cryptocurrency market experienced a surge in liquidations over the past 24 hours as the price of bitcoin dropped alongside a broader exodus from risk assets.

In the past 24 hours, a total of 81,838 traders were liquidated, with the total liquidations across centralized exchanges amounting to $272 million, according to data from Coinglass. Bitcoin was the leading cryptocurrency in the liquidations, with almost $78 million liquidated in the past 24 hours. Among these bitcoin liquidations, almost $44 million of them were long positions.

The downturn in the cryptocurrency market came as stocks tumbled on Friday. The S&P 500 was headed for its worst session in nearly two years, as a much weaker-than-expected U.S. July jobs report stoked fears of an impending recession. The Nasdaq Composite dropped 2.9%, pushing the tech-heavy index's decline from its recent all-time high to over 10%.  The Dow Jones Industrial Average fell 863 points, or 2.1%, and was down as much as 989 points at one point in early morning trading.

Bitcoin could retest the $62,500 support level

One analyst said the largest digital asset by market capitalization could retrace again to the same support level.

"We believe that the market is currently in an accumulation phase with a potential retest of the $62,500 support incoming in the near future. With no major movement expected in a specific direction, we recommend maintaining reduced exposure," BRN analyst Valentin Fournier told The Block.

However, he added that in the medium term, as the digital asset accumulates liquidity, bitcoin could potentially break out above the $70,000 resistance level. Fournier cited factors playing into bitcoin's current range-bound performance. He said spot bitcoin exchange-traded funds have seen only small positive net flows over the two last days.

"This indicates indecisiveness from investors but still a generally positive overall sentiment," he added. Fournier also highlighted a particular factor that could potentially delay a clear bullish trend for bitcoin.

"Kamala Harris has greatly improved her odds of winning the U.S. presidential election, triggering fears of a possible anti-crypto stance and a reduction of the enthusiasm that followed Trump’s speech and promises," Fournier said.

Harris improving elections odds and bitcoin

Some betting sites now place Harris's chances of victory in November ahead of Donald Trump's. The online prediction market PredictIt now shows Harris as the favorite to win in November, with shares of her victory selling for 52 cents, while shares for a Donald Trump victory are selling at 50 cents.

Kamala Harris is ahead of Donald Trump in the U.S. presidential election race. Image: PredictIt.

Online exchange YouHodler's Ruslan Lienkha said cryptocurrency investors are watchful of the current vice president's strengthening odds on multiple online prediction markets, as they see a potential Harris victory as being bearish for the largest digital asset by market capitalization.

"If investors believe a Democratic administration might impose stricter cryptocurrency regulations, bitcoin’s price could suffer," Lienkha told The Block. "Harris’s momentum in crucial swing states could intensify these concerns."

Bitcoin 25% delta skew shows a falling excess demand for out-of-the-money (OTM) calls over puts. Image: Deribit.

Bitcoin options 25% Delta skew

According to Deribit's weekly analytics report, the bitcoin options 25% delta skew shows that OTM puts have higher implied volatility than OTM calls, indicating that the market might be expecting a bearish move.

"Bitcoin 25-Delta Risk Reversal – the fall in outright vol is matched by a falling excess demand for OTM calls over puts," the report added.

Bitcoin traded flat, priced around $63,070 at publication time, according to The Block's Bitcoin Price Page.