Key Takeaways
A few days ago, Bitcoin [BTC] tumbled down from $124k to sub-$118k, sparking $961 million in liquidations. Notably, $821 million of that hit leveraged longs.
Clearly, bulls chasing a breakout got trapped, sweeping long liquidity clusters and piling pressure on the price. At press time, BTC was priced at $115k following a 2% intraday dip, with two fat liquidity clusters stacking up.
So, are we staring down another bloodbath?
Bitcoin rotation sparks derivatives frenzy
A $1 billion crypto liquidation hit as the market pulled back across the board. TOTAL2 (ex-BTC market cap) dropped by 3.84% – A sign that capital bled out of altcoins too. In short, it wasn’t just a BTC-led move.
Now, Bitcoin dominance [BTC.D] has been trying to reclaim ground lately, consolidating around 59% for a week with a 0.40% intraday pop. Meanwhile, TOTAL2 slid by 2.74%, confirming the rotation back into BTC.
Derivatives are catching up too. BTC Open Interest jumped by nearly $380 million in under 48 hours, with the Estimated Leverage Ratio (ELR) ticking north and hinting at rising speculative heat.
Source: CryptoQuant
All in all, the market’s rotating back into Bitcoin, altcoins are bleeding, dominance is holding around 59%, and derivatives are heating up. It looks like volatility could spike soon.
Supporting this, in the last 24 hours, total crypto liquidations hit $563 million, with $485 million crushed from leveraged longs. That’s a serious 85%+ hit on bulls overextended in the long leverage game.
So, is the market sending the wrong signal? That minor 0.40% BTC.D pop, combined with a spike in leveraged flow over spot – Are we gearing up for another $1 billion crypto liquidation?
Another round of crypto liquidations looms
Well, looks like Bitcoin’s Open Interest (OI) isn’t playing along with the price. Even with a 4% drop off its $124k ATH in a day, OI’s holding above $80 billion – Marking a clear divergence from previous cycles.
Historically, BTC tops have synced with OI peaks, with the OI rolling over as the BTC was sold off – Evidence of traders unwinding leverage. Take May’s run, for instance – BTC hit a then-ATH of $111k with an OI of $81 billion.
The next day, the OI tanked to $77 billion as BTC slid to $107k, sparking a broader crypto liquidation wave. This time around, even with BTC nearly 8% off its ATH, the OI hasn’t been topped.
Source: Coinglass
What it means is that the market hasn’t started full deleveraging yet. Traders are still loaded, with 60%+ long skew on Binance’s BTC/USDT perpetual trade.
Bottom line – The setup’s primed for another round of crypto liquidations if BTC takes a dip. OI is still climbing, and with volume spiking on what looks like a false bullish signal, another $1 billion+ wipeout feels almost baked in.
