Bitcoin's (BTC) strong 7.4% rally began in the primary week of January and has shifted markets' focus back to futures positioning, where liquidation data suggests price motion could possibly be asymmetrical.
Key Takeaways:
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Over $10.6 billion in long liquidations are below $84,000, versus just $2 billion briefly liquidations above $104,000.
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Hyperliquid retail positioning shows that short positions are more vulnerable to upside moves than long positions to downside moves.
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To confirm a structural reversal, Bitcoin must recapture the $100,000 cost base.
Liquidation imbalance increases volatility risk for BTC
According to CoinGlass, about $10.65 billion in leveraged long positions could be liquidated if Bitcoin hits $84,000 again. In contrast, only about $2 billion briefly positions face liquidation if BTC rises to $104,000.
BTC liquidation map. Source: CoinGlass
This imbalance is important because liquidations can act like forced market orders. A move lower towards $84,000 poses the danger of long-term liquidations, increasing selling pressure. However, however, fewer short positions mean less fuel for a squeeze unless positioning changes quickly.
However, with hyperliquid the outlook is different. Crypto trader ChimpZoo highlighted that retail traders are disproportionately short, noting that a rally could liquidate around 6,000 BTC price of retail shorts, in comparison with just 2,000 BTC of retail longs in the same move lower.
The trader called the setup “absurd” and argued that such positioning could propel Bitcoin to latest highs at a rapid pace. However, a better take a look at the info suggested a more balanced risk profile. While the stock market still has a net-short bias, the liquidation risk is comparatively symmetrical at a $10,000 price move.
BTC liquidation map on Hyperliquid. Source: CoinGlass
Such a move would see roughly 3,860 BTC in long positions liquidated on a downward move, in comparison with roughly 4,100 BTC briefly positions on an upward move.
The $100,000 level stays the important thing structural test
Despite the liquidation-driven momentum, crypto analyst Dan warned that a straight-line rise to latest all-time highs is unlikely. First, Bitcoin must regain its 6-12 month bearer cost base to substantiate a trend reversal.
Bitcoin realized price UTXO ages and price basis. Source: CryptoQuant
This level is currently around $100,000. A sustained break above would signal a return to a bullish market structure and open room for further upside. A rejection would suggest that the general downtrend stays intact despite recent initial strength.
From a technical perspective, short-term risks exist even below current prices. Bitcoin could retest the CME gap formed over the weekend between $90,600 and $91,600, with one other gap lower between $88,170 and $88,700 still to be closed.
If BTC rejects resistance near $96,000, these gaps could come back into play later this month.
Bitcoin CME gaps have been forming over the past two weeks. Source: Cointelegraph/TradingView
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This article doesn’t contain any investment advice or recommendations. Every investment and trading activity involves risks and readers should conduct their very own research when making their decision. While we attempt to offer accurate and up-to-date information, Cointelegraph doesn’t guarantee the accuracy, completeness or reliability of the data in this text. This article may contain forward-looking statements which can be subject to risks and uncertainties. Cointelegraph won’t be responsible for any loss or damage arising out of your reliance on this information.
