- Bitcoin (BTC) continued to fluctuate between $103k and $106k.
- The dominance of long liquidations for Bitcoin surged by 10% in the span of seven days.
After reaching a recent high of $108k a week ago, Bitcoin struggled to maintain its upward trend. In the past day, BTC experienced a sharp decline, dropping to a low of $102k and resulting in significant long liquidations.
Surge in Bitcoin’s Long Liquidation
According to CryptoQuant analyst Axel Adler, the dominance of long liquidations for Bitcoin has increased from 0% to 10% within the past week. Despite this surge, BTC continued to trade within a tight range of $103k to $106k.
The rise in long position liquidation without a significant price crash indicates ongoing support from buyers.
When long positions are liquidated at a high rate, it indicates that investors who bet on price increases are being forced out of the market. The recent spike was particularly notable as prices dropped to $102k.
Notably, long liquidations for BTC reached 2.2k BTC, the highest level in the past week. This suggests panic selling and forced closures as prices continued to decline.
High long liquidations often lead to short positions dominating the market, resulting in a negative Funding Rate. This indicates a strong belief among traders that prices will continue to decline.
Future Outlook for BTC
At the time of writing, Bitcoin was priced at $103,763, suggesting that the downward trend has halted, posing potential risks for the market.
If the dominance of long liquidations increases by another 5–7%, there is a high chance of a bearish washout.
A higher dominance ratio could signal a reversal in market sentiment, favoring bulls if a turnaround occurs.
This scenario could mark a pivotal moment and indicate a shift in sentiment in the futures market towards bullish trends. Therefore, following a recovery from the recent dip, a short squeeze could be anticipated.
Buyers are beginning to re-enter the market as demand for shorts increases, reflected in a positive Taker Buy Sell Ratio. This short demand could lead to organic Bitcoin demand, potentially pushing the coin back to $104,577.
If sellers re-enter the market, the downside may resume, causing another drop towards $102k.
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