A sell-off across Bitcoin (BTC) and the broader altcoin market triggered more than $1 billion in crypto liquidations within 24 hours, as short-term holders moved tens of thousands of BTC onto exchanges at a loss.

Liquidations reached nearly $1.1 billion in the 24 hours after Bitcoin dropped to $80,350. Analysis by trader and analyst Rekt Capital warned that the downside raised the odds of a breakdown below key support, while onchain data showed Bitcoin short-term holders sending more than 55,000 BTC to exchanges at a loss on Thursday.

Bitcoin's Drop to $80,350 Fuels $1.1 Billion in Liquidations

Data from CoinGlass put total crypto liquidations at $1.09 billion for the 24 hours to 10 am UTC on Friday, the largest daily tally since Aug. 21. On that date, BTC/USD climbed from $73,000 to $79,500, setting two-month highs and triggering $1.3 billion in crypto short liquidations. By contrast, long positions accounted for $1.05 billion of Thursday's total, the overwhelming share of the day's liquidations. Liquidations occur when an exchange forcibly closes a leveraged position after a price move erodes the trader's margin, and heavy liquidations of long positions — traders betting on higher prices — often accompany sharp market drops.

The sell-off followed reports that the US government moved more than 12,000 BTC it had previously confiscated. Such transfers can fuel potential sales. Federal agencies have accumulated seized Bitcoin over years of enforcement actions, making government-linked wallet movements a recurring item on onchain analysts' watchlists.

BTC/USD fell to $80,350 on Bitstamp, its lowest level since Sept. 18, before recovering to around $82,500 on Friday. That level remained key throughout Bitcoin's broader uptrend since early July and marked the breakout point of an inverse head-and-shoulders pattern — a formation Bitcoin would need to hold as support to confirm a bullish reversal.

Rekt Capital, who has tracked the reversal pattern and its similarities to Bitcoin's 2023 recovery, now views the upcoming weekly candle close as decisive.

"Bitcoin is currently failing its retest of ~$82500. Weekly Close below $82500 and turn it into resistance however and Bitcoin will be back in its Macro Accumulation Range," he said Thursday on X.

Short-Term Holders Send 55,600 BTC to Exchanges at a Loss

Onchain data also pointed to mounting stress among newer Bitcoin investors as the market fell.

Analytics platform CryptoQuant contributor Amr Taha reported that short-term holders — entities that have held Bitcoin for up to six months without selling — sent 55,600 BTC to exchanges at a loss on Thursday, according to a CryptoQuant report.

Transactions at a loss refer to coins being sent to exchanges at a lower price than in their previous transaction. They often reflect investors' impulsive urge to exit positions at a loss, fearing further downside if they delay their sales.

CryptoQuant noted that Thursday's loss tally exceeded the figure recorded on June 26, when Bitcoin fell below $60,000 for the second consecutive day.

"Notably, Bitcoin was trading above $81,000, compared with $59,300 in June — a price difference exceeding 36%," the contributor wrote, adding that exchange users may not have opted to sell the entirety of their positions, even after moving them to their accounts.

"Historically, aggressive loss-driven selling by short-term participants can coincide with short-term capitulation, potentially exhausting weaker holders and creating conditions for a subsequent price recovery," the report said.