In the last day, the cryptocurrency market has been highly volatile with Bitcoin climbing above $100,000. This surge led to significant liquidations amounting to almost $1 billion and changed trader behavior.
Moreover, data from the Bitcoin derivatives market is becoming more active, causing concerns about the potential for larger liquidation waves.
The rise of Bitcoin above $100,000 resulted in a surge in long position liquidations. Approximately 190,000 traders were liquidated, incurring losses of $970 million. Short positions suffered the most significant losses, totaling $836 million, marking the largest short liquidation since 2021.
CoinGlass reported that the actual figures could be even higher, as Binance has not fully disclosed its liquidation data. With more long positions at risk, there is a possibility of a "long squeeze," where massive liquidation of long positions triggers panic selling, precipitating a price decline if Bitcoin drops below $100,000.
According to CoinGlass's data, if Bitcoin falls below $100,000, nearly $2 billion worth of long positions across exchanges could face liquidation. Additionally, a drop below $98,000 could result in a total liquidation volume as high as $3.45 billion, signaling a change in trader sentiment with many placing larger bets with higher leverage in anticipation of Bitcoin's further price increase.
Furthermore, CoinGlass data indicates that Bitcoin Futures Open Interest has reached a record $67.4 billion across exchanges, reflecting a growing demand for short-term leveraged trading and heightened risk if the market suddenly reverses. Historically, whenever Bitcoin's Open Interest has surpassed $65 billion, a market correction has typically followed shortly after.
Apart from surpassing $100,000, Bitcoin's influence in the global financial market is increasing. Bitcoin briefly surpassed Amazon to become the world's fifth-largest asset with a market capitalization of $2.05 trillion. Standard Chartered forecasts that Bitcoin could break its all-time high and reach $120,000 in Q2.