- Bitcoin’s derivatives market saw $5.62 million in liquidations, with a dominant 1,530% imbalance favoring long positions over shorts.
- The price volatility of Bitcoin triggered a significant long squeeze, causing over $5.28 million in liquidations in just four hours.
- Overleveraged positions on major exchanges like Binance and OKX reveal that traders are highly exposed to potential losses in this market.
Bitcoin’s derivatives market has witnessed a major shakeout, as $5.62 million worth of positions were liquidated over the past four hours. The vast majority of these liquidations, around $5.28 million, came from long positions, with just $345,000 in shorts being squeezed out. This represents a significant imbalance of 1,530%, highlighting a market under stress.
Subsequently, the price has not sustained its gains, and it has dropped towards the bottom end of the range. A large number of traders anticipating a rebound were taken unawares, and margin calls were hefty.
Despite the volatile price action, the data suggests that overtrading is contributing to the severity of these liquidations. The market appears to be highly leveraged, with traders holding large positions in the expectation of further gains. As a result, when the price did not move in their favor, the liquidation effect was amplified.
Interestingly, major exchanges, including Binance and OKX, are not showing the same level of distress in their account ratios. Binance’s BTC/USDT ratio is around 1.89, while OKX shows a similar figure of 1.88. Even though top traders on Binance are holding significantly more long positions than shorts, the overall market seems to be overly exposed to potential losses. This positioning gap has left the market vulnerable to sudden price corrections, which can lead to a snowball effect of liquidations when the price moves unexpectedly.
Currently, Bitcoin’s price is hovering just above $111,000. While the spot price remains relatively stable, the data reveals a continuing skew in leverage, with a clear dominance of long positions. As long as this imbalance persists, Bitcoin’s market could see further impacts from short sales even if prices hold steady.
