- BTC continued to trade within a narrow range of $103k and $106k.
- Bitcoin’s long liquidation dominance surges by 10% in seven days.
Since hitting a local high of $108k a week ago, Bitcoin [BTC] has struggled to keep an upward momentum. Over the past day, BTC declined sharply, hitting a low of $102k, resulting in massive long liquidations.
Bitcoin’s long liquidation spikes
According to CryptoQuant analyst Axel Adler, Bitcoin’s long liquidation dominance has surged from 0 % to 10% over the past week. Regardless, BTC continued to trade within a narrow range between $103k and $106k.
This surge in long position liquidation without a sharp price crash indicates sustained buyer support.
Source: CryptoQuant
Usually, when long positions liquidation surges, it implies that investors betting on prices to rally are forced out of the market. The spike was particularly extreme over the past day, as prices dipped to a low of $102k.
Notably, BTC’s long liquidations hit 2.2k BTC, which is the highest level of the past week. This suggests that markets experienced panic selling alongside forced closure as prices continued to decline.
Source: CryptoQuant
When longs get liquidated in such a manner, shorts take over the markets, resulting in a negative Funding Rate. This suggests that traders are aggressively betting on prices to drop even further.
Source: CryptoQuant
What’s next for BTC?
As of this writing, Bitcoin was trading at $103,763. This implied that prices have stopped falling, presenting the market with risky positions.
Under these circumstances, if long liquidation dominance rises by another 5–7%, there will be a high probability of washing out bears.
A higher dominance ratio could see bears kicked out of the market if a reversal emerges.
Such a scenario will become a turning point and indicate a reversal in futures market sentiment in favor of bulls. Therefore, after prices recovered from a recent dip, the next plausible thing to expect is a short squeeze.
Source: CryptoQuant
Buyers started to return to the market as demand shorts surged, as evidenced by a positive Taker Buy Sell Ratio. The demand for shorts will cause organic demand for Bitcoin, and the king coin can reclaim $104,577.
The downside can only resume if sellers return to the market, resulting in another drop towards $102k.
