The cryptocurrency market is struggling to gain momentum amid persistent pressure on Bitcoin and altcoins. After sharp declines over the past week, one analyst noted that BTC is trading just above critical liquidation zones where billions of dollars’ worth of leveraged positions have accumulated.
Bitcoin Liquidation Threat!
Liquidation data shared by Joao Wedson, CEO of cryptocurrency analytics firm Alphractal, shows that long positions are accounting for a growing share of the market, and that a sharp drop in BTC’s price could trigger on-chain liquidations.
According to Alphractal’s liquidation-level data, long positions make up 622% of all positions at risk, compared with 38% for short positions. This means $36 billion in long positions and $22.5 billion in short positions are at risk of liquidation.
This distribution points to a greater concentration of bullish leveraged trades in the Bitcoin market and suggests that the market generally expects an uptrend. Wedson said liquidation clusters building just below the current price suggest selling pressure could rise rapidly if prices pull back.
The $72,500 Level Is Critically Important!
Data shared by Wedson shows three key liquidation zones just below Bitcoin’s price.
“Approximately $1.1 billion in liquidation risk at the $73,427 level
• Approximately $1 billion in liquidation risk at the $72,713 level
• Approximately $1.1 billion in liquidation risk at the $72,475 level
A decisive break below the $72,500 level, in particular, could set off a chain reaction, liquidating more than $1 billion in long positions.
Short Positions Are Building Up Farther Away!
By contrast, Bitcoin’s first major clusters of short liquidations are concentrated in the $83,400-$85,100 range. Wedosn said these levels are approximately 12-15 percent away from the current price, indicating that liquidation pressure is more intense to the downside in the short term.
However, liquidation maps do not definitively establish which way prices will move. They only show the levels at which leveraged positions are at risk. Wedson said whether Bitcoin can hold the $72,500 support level, along with price movements around resistance levels above, will be closely watched to gauge its future direction.
*This is not investment advice.
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