Liquidation Risk
One reason for concern is the risk of Bitcoin long liquidations. According to a trader known as TheKingfisher ^(https://www.blogquicker.com/goto/https://thekingfisher.io/), the recent volatility has made hedging more expensive, and leverage is becoming costly. Traders using high leverage are especially at risk.
The current price of Bitcoin is around $68,400, and traders who bought in at this level with 50x leverage haven’t been liquidated yet. However, TheKingfisher estimates that there is a 62.48% chance of liquidation within 24 hours.
Additionally, the trader pointed out that the growing liquidity pool ^(https://www.blogquicker.com/goto/https://www.coinbackyard.com/defi/how-liquidity-pools-power-decentralized-finance/) could trigger what is called a “Darth Maul candle.” This term refers to sudden and sharp price movements, which could lead to rapid liquidations.
Chart Patterns and Market Sentiment
Another popular voice in the crypto sphere ^(https://www.blogquicker.com/goto/https://www.coinbackyard.com/cryptocurrency/where-crypto-stands-22-days-before-the-u-s-election/), Michael van de Poppe, agrees that Bitcoin may take up a similar posture seen in the past seven months. He shared a chart that had Bitcoin’s recent rally above $68000. Van de Poppe said Bitcoin could dip to about $64130 to “suck in demand-side liquidity,” after which the asset would push upwards again.
What adds to the intrigue, though, is the surge in Bitcoin futures open interest. Yesterday, on Oct 16, CME Bitcoin ^(https://www.blogquicker.com/goto/https://www.coinbackyard.com/cryptocurrency/bitcoin-cme-gaps-navigating-cryptocurrency-terrain/) futures reached an all-time high in OI at 179,745 BTC, worth approximately $1.2 billion. According to some analysts, this could, in fact, lead to a pullback in prices that would force traders with long positions to close their positions.
Mixed Views on Open Interest
Not all traders see the rising open interest as a negative signal. A Bitcoin trader known as Wicked has a more optimistic outlook. Wicked believes the increase in OI is a sign of bullish momentum. This sentiment is echoed by CoinGlass, a platform that tracks crypto futures. According to CoinGlass, the rise in futures OI indicates that a significant price movement is on the horizon, and it could push prices higher rather than lead to a pullback.
Key Concerns at a Glance:
|
Concern |
Description |
|
Liquidation Risk |
High leverage traders at risk of liquidation as volatility increases. |
|
Market Pattern |
Bitcoin may drop to collect liquidity before moving higher. |
|
Open Interest |
Surge in Bitcoin futures OI could indicate a price drop, but opinions differ. |
Bitcoin traders remain cautious as they navigate potential risks. While some fear a price drop, others believe the market could continue its bullish run.
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