Bitcoin (BTC)’s 11% weekly gain has traders worried that the market could witness one last retracement before BTC continues its rise to record highs.
Liquidating Bitcoin purchases can be risky
“The current trading activity of around 68.4k is linked to the initial volatility on July 29, when the price fell to 49,000 just five days later,” pseudonymous derivatives trader TheKingfisher said in a post to X on October 17.
The recent surge in volatility suggests that “hedging will become more expensive and leverage more expensive” as volatility continues to rise, the analyst argues.
“Traders who bought at the highest price using 50x leverage have not yet been liquidated and the price remains at 67,350,” TheKingfisher explained. “The probability of it being liquidated within 24 hours is 62.48%,” he added.
TheKingFisher also highlighted that liquidity pools are growing and that if this were to happen, a “Darth Maul candle” type exit could occur.
“If it drops to 61.3k, it’s going to be painful.”
Bitcoin liquidation map. source: kingfisher
Meanwhile, Michael van de Poppe, founder of MN Capital, shared a similar opinion, saying that Bitcoin is following the same pattern that has held for the past seven months.
Van de Poppe shared the following chart in an
According to the chart, Bitcoin price is likely to first fall to collect demand-side liquidity around $64,130 and then make another upward move.
“I think we will make some minor corrections and then a final correction and start heading toward new all-time highs starting next week.”
BTC/USD 12-hour chart. source: Michael van de Poppe
Moreover, the recent surge in Bitcoin futures open interest (OI) has some analysts wary of a possible pullback to liquidate long positions.
As K33 Research senior analyst Vetle Lunde points out, on October 16, CME Bitcoin futures notional OI hit an all-time high of 179,745 BTC, which is equivalent to about $1.2 billion at current exchange rates.
“Open interest has increased by a massive 32,440 BTC since October 10th, with active market participants driving this growth, resulting in a 40% increase in weekly exposure.”
CME Bitcoin Futures OI. Source: K33 Research
relevant: Ethereum price crashes often occur after peaks in ETH open interest. Will history repeat itself?
What if the OI surge is positive for BTC price?
However, not all analysts believe the OI surge portends a sharp price correction.
Anonymous Bitcoin trader Wicked believes the recent surge in open interest (OI) for CME Bitcoin futures to an all-time high is a “further bullish signal” for the largest cryptocurrency by market capitalization.
For CoinGlass, a cryptocurrency futures and information platform, the surge in Bitcoin futures OI is “a sign that there is significant price movement ahead.”
source: Coin Glass
This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.