Bitcoin, the biggest digital currency, took a sudden dip below $60,000, sending shockwaves through investors and analysts who scrambled to understand the cause behind the move. This plunge, the first in over a month, came amidst rising volatility preceding the upcoming halving event set for April 20. Bitcoin briefly touched $59,648 on Wednesday before rebounding, marking a nearly 15% decline from its peak of $73,750 on March 14.

Recent market observations suggest that a major factor driving the drop in BTC price could be a series of liquidations of long positions fueled by excessive leveraging. As prices dipped, leveraged positions faced liquidation, setting off a chain reaction of sell orders that intensified the downward pressure on Bitcoin's value. Bloomberg speculates that the recent downturn in Bitcoin may have been accelerated by a surge of liquidations in long positions on digital assets, with almost $780 million in bullish crypto bets liquidated within 24 hours last Friday.

According to CoinGlass data, the current decline in BTC led to $251 million in liquidated positions across the market, with long bullish bets accounting for $173 million of this total. With a significant number of long positions liquidated, selling pressure mounted, driving further price drops. This triggered more liquidations, creating a spiral that pushed Bitcoin below the $60,000 threshold.

At the time of writing, BTC had slightly rebounded, trading 0.85% higher in the last 24 hours at around $62,700, as buyers seized the opportunity to buy the dip. Crypto analyst Ali noted that over 27,700 BTC, valued at approximately $1.72 billion, had moved into accumulation addresses during the Bitcoin price decline. Despite the recent sell-off flushing out leverage from the crypto market, certain market participants remain largely bullish about Bitcoin's long-term prospects.

In conclusion, Bitcoin's plunge below $60,000 appears to have been triggered by a wave of liquidations in long positions driven by excessive leveraging, intensifying selling pressure and leading to a cascading effect on its price. However, amidst the volatility, signs of recovery and long-term optimism persist among some market participants.