The cryptocurrency market remains vigilant as the potential for further upward movement in Bitcoin’s value poses a risk of triggering a significant wave of liquidations. Recent data indicates that $9.41 billion in short positions could be eliminated if Bitcoin reaches the $90,000 price level.
Short Sellers at Risk of Liquidation at $90,000
As per insights from Seth, a crypto analyst on X (previously Twitter), the market may witness another round of liquidations, with $9.41 billion in shorts jeopardized if Bitcoin approaches the $90,000 threshold. Furthermore, market analytics reveal a substantial accumulation of short positions which might instigate a short squeeze should BTC maintain its upward trajectory.
Seth provided a visualization featuring a Bitcoin liquidation heatmap, illustrating a substantial concentration of short liquidations occurring between $80,000 and $90,000, with the highest risk identified at the latter. Consequently, traders are advised to monitor for resistance or momentum changes within this crucial price zone.
Should Bitcoin ascend to the $90,000 mark, it could compel traders who have taken short positions to cover their losses, potentially driving prices even higher. Short liquidations transpire when traders, who have bet against an asset’s price rise, are compelled to close their positions in response to increasing prices. If the price increases significantly, short sellers will have to repurchase BTC at a loss while their brokers automatically execute liquidations on their behalf.
Seth’s chart indicates that liquidation volumes have been on a steady rise as Bitcoin breaks through key resistance levels. Approximately a week ago, a spike to $87,000 resulted in $77 million in short positions being liquidated.
An even larger liquidation event is expected to occur at $90,000, which now serves as a psychological threshold for Bitcoin. Additionally, should BTC reach this level, a short squeeze could impact the market. Such events often lead to high volatility, as notable liquidation spikes can push prices upward. Furthermore, forced repurchases from short sellers could amplify BTC’s escalation, fostering additional momentum.
As reported by CoinMarketCap, Bitcoin’s current price is $83,029, reflecting a 1.12% rise over the last 24 hours. Traders are likely keeping a close watch as the market approaches the $90,000 threshold, representing an approximate 8.39% increase from the current market valuation of the cryptocurrency.
BTC Price Aiming for $94,000 Breakout
‘Crypto Fella,’ a market analyst on X, cautions that Bitcoin might undergo a significant market shakeout in the near future. However, following this, a substantial breakout could be anticipated.
In his chart depicting this breakout scenario, the analyst pointed out a black zigzag line indicating a potential decline in Bitcoin’s price to the purple support and demand zone ranging from $78,692 to $70,000. Once BTC reaches this range, the price is expected to rally towards the analyst’s target of $94,655.
Featured image from Unsplash, chart source from Tradingview.com
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