Bitcoin (BTC) Price Drop Stalls Memecoin Bloodbath, But PEPE (PEPE) Might Recover the Quickest

The last 36 hours have seen Bitcoin's (BTC) price fall by 9% from $58.8k to $55.5k, before bouncing by 6% to touch $56.8k at press time.

Bitcoin’s recent price volatility led to a large number of crypto liquidations, with the long positions experiencing more pain.

According to data from Coinglass, between 4 and 5 July, a combined total of $750.55 million in long positions and $198.66 million in short positions were liquidated.

In the Futures market, a liquidation occurs when a trader’s position is forcibly closed due to their account margin being insufficient to maintain their open positions. When these positions are closed, they introduce market orders in the opposite direction of the open position before liquidation.

Hence, a quick flurry of long liquidations due to swift price drops can lead to a liquidation cascade.

However, large crypto liquidations in this manner can be beneficial for the market. It wipes out over-leveraged traders, paving the way for a spot-driven price move and reducing the impact of speculation.

Pepe might benefit from recent crypto liquidations

Among the memecoins, the third-largest by market capitalization, Pepe, might stand to benefit from the recent wave of selling.

AMBCrypto’s analysis of the PEPE liquidation heatmap showed that a huge chunk of liquidation levels in the $0.000077-$0.0000095 region were wiped out. This has been building up since mid-May. To the north, the $0.000014 zone could be the next magnetic zone for the altcoin’s price.

AMBCrypto’s analysis of Dogecoin [DOGE] and Shiba Inu [SHIB] revealed that the two memecoins have a cluster of liquidation levels further south.

Hence, a recovery for DOGE or SHIB might take more time and a deeper correction. Even though Shiba Inu exhibited a bullish flag on the higher timeframes, it is PEPE that might recover the quickest from its recent losses.

Pepe bulls must defend the $0.00000796-$0.0000089 territory to keep the higher timeframe bullish hopes alive. The recent crypto liquidations have incited panic in the market, but there is some hope that July might see a price recovery initiated.

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