Bitcoin Heading for Another Crash? Over $100 Billion in Liquidations Signals Trouble

Bitcoin (BTC), the largest cryptocurrency in the market, was expected to continue its bull run after consolidating its gains. However, on June 14, just before its daily close, bitcoin suffered a 3% drop, falling below $25,000 and reaching a low of $24,700, a price level not seen since mid-March. Went.

In light of these developments and the increasing regulatory pressure from the US Securities and Exchange Commission (SEC) on the nascent industry, many are beginning to believe that the recent bull run for BTC was nothing more than a fakeout.

Bitcoin on the verge of mass liquidation

Bitcoin has been facing a lot of turbulence lately, and the troubles don’t seem to be stopping anytime soon.

The latest data shows that bitcoin is in trouble as liquidation above $100 billion looms, indicating the potential for another crash in the crypto market. Despite attempting to overcome its nearest resistance levels, bitcoin is struggling, with the prospect of further downside and increased selling pressure.

as per latest statistics Provided by the trader and crypto analyst under the pseudonym “Bleeding Crypto”, there is a total liquidation of $63.9 billion at the $24,200 price level and $52.3 billion at the $21,800 mark.

Increasing selling pressure in bitcoin could potentially result in more liquidations and a subsequent drop in the cryptocurrency’s price, delaying any further gains and returning to lower price levels seen at the start of the year. There may be a return. This can create fear among investors, further fueling short positions and potentially leading to a vicious cycle.

However, if this is the case, it is important to note that an opposite scenario is also likely, where institutional investors hunt for short position liquidation, which leads to an acceleration of buying pressure and an upward movement in the price of bitcoin. .

BTC Open Interest Skyrockets

Crypto analyst and CryptoQuant author Maarten recently warning Volatility is coming in the world of bitcoin. According to him, the open interest in the cryptocurrency has increased by $439 million, even though the price of BTC is moving sideways.

Marten’s analysis shows that a significant amount is being pumped into the market, which could lead to a significant increase in volatility.

Maarten noted that this situation is different from previous occasions, as funding rates for bitcoin are trending down and close to neutral. This means that the longs and the short are almost in perfect balance, creating a situation where any significant move in either direction can start a cascade of buying or selling.

Open interest refers to the total number of contracts outstanding in a particular market that have not yet been settled. In the case of bitcoin, an increase in open interest usually indicates that more traders are entering the market, which can lead to increased volatility.

The effect of the increase in open interest on the bitcoin price and market direction is unclear. While an increase in open interest may indicate increased interest in bitcoin and potentially lead to an upward move, it can also lead to greater volatility and a drop in price if market sentiment turns negative.

As an alternative, According According to the latest data from Glassnode, the volume of the liquefied bitcoin supply is growing at a rate of 119,000 BTC per month. This suggests that bitcoin holders are becoming increasingly reluctant to sell or transfer their coins, leading to a concentration of coins in wallets with sparse spend histories.

This is an important trend to watch, as it shows that bitcoin holders remain confident in the cryptocurrency’s long-term potential.

Featured image from iStock, chart from TradingView.com