Many people are interested in Bitcoin’s current price trend, especially buyers on the biggest centralized exchanges (CEXs). Analysts say that going over important price limits could lead to huge sales, which would make the market more volatile and upset investors. As the levels of liquidation get closer to key points, traders are paying close attention to every move BTC makes.
Liquidation Risk Below $74,000
Recent data that says if the price of Bitcoin drops below $74,000, the “cumulative liquidation intensity of long positions” across top CEXs could hit an incredible $476 million. This means that a lot of long traders would have to get out of their positions, which could send the market sharply down as it responds to the liquidations. The intensity shows how concentrated and risky these long bets are at this level, even though the chart doesn’t show the exact number of contracts or their values.
Short Squeeze Risk Above $78,000
If Bitcoin goes over $78,000, those who are in short positions will feel the heat. In this case, the amount of money that will be liquidated from short contracts is expected to reach $982 million. This could lead to a classic short squeeze, in which bearish traders quickly close their positions, often at a loss.
How the Liquidation Chart Works
It’s important to remember that the bankruptcy chart doesn’t show exact contract numbers or dollar amounts. The bars, on the other hand, show how intense individual possible liquidations are. These visual clues help find “liquidation clusters,” which are areas of price action where a lot of leveraged bets are likely to go live. The higher the bar, the more likely it is that a liquidity-driven chain reaction will happen, which could make the market less stable.
How Liquidation Clusters Affect the Market
The market often reacts violently when prices hit areas with a lot of people selling. Extreme volatility can happen when there are sudden increases in buy or sell orders, which can have effects that spread across markets.
Conclusion
Bitcoin is getting dangerously close to levels that could cause hundreds of millions of dollars worth of liquidations. If it falls below $74,000 or rises above $78,000, the market could experience quick and big changes.
