Bitcoin’s (BTC) impressive 7.4% rebound commenced the first week of January, redirecting market attention towards futures positioning. Current liquidation data indicates the price dynamics might favor bulls.
Key Takeaways:
- Over $10.6 billion in long liquidations remain beneath the $84,000 mark, compared to just $2 billion in shorts above $104,000.
- Retail traders on Hyperliquid are seen holding more short positions, potentially leading to vulnerabilities compared to long positions.
- Bitcoin needs to surpass the $100,000 cost threshold to confirm a shift in market trends.
Liquidation Imbalance Heightens Volatility Risk for BTC
As per statistics from CoinGlass, approximately $10.65 billion in leveraged long positions could be liquidated if Bitcoin approaches $84,000. Conversely, approximately $2 billion in short positions would risk liquidation if BTC climbs to $104,000.
This imbalance is crucial as liquidations act as forced orders in the market. A downward move to $84,000 risks triggering long liquidations, intensifying selling pressure, while an upward trajectory could lack the necessary momentum unless positioning alters significantly.
However, insights from trader ChimpZoo suggest a different narrative. He noted that retail traders are primarily short, asserting a rally could eliminate about 6,000 BTC in retail shorts, while only 2,000 BTC in retail longs would be affected by a downside move. He characterized the current setup as “absurd”, hinting at the potential for a rapid spike to new heights for Bitcoin.
$100,000 Level Remains a Key Structural Test
Despite the momentum driven by liquidations, Analyst Crypto Dan cautions that a straightforward leap to new record highs is improbable. Reclaiming the six-to-12 month holder cost basis is essential to validate a trend reversal.
This critical level is around $100,000. A sustained breach beyond this price could indicate a transition back to bullish market dynamics, offering a pathway for greater gains. Failing to breach this level could reinforce the ongoing downtrend despite previous gains.
From a technical perspective, short-term risks are still present below current levels. Bitcoin might revisit the CME gaps established over the weekend, ranging from $90,600 to $91,600, with another gap unfilled between $88,170 and $88,700.
If Bitcoin encounters rejection near the $96,000 resistance, these gaps could resurface in discussions as January progresses.
