Key Points
- Bitcoin is nearing key liquidation levels that could instigate a short squeeze and forcibly drive the price upwards.
- Around $10 billion worth of short positions are at risk at the $66k level, which could trigger further liquidations.
Bitcoin is on the verge of reaching crucial liquidation levels that could set off a sudden short squeeze and powerfully push the price upwards.
A notable analyst has suggested that short positions worth $10 billion are at risk at the $66k level. Hitting this level would set off a domino effect.
Liquidation Levels and Short Squeeze
Liquidation levels of $70,300 and $72,578 might also ramp up the upward pressure, providing a strong case for Bitcoin in the coming days.
At the $66,200 level, $10 billion in short positions are poised to be liquidated, effectively translating into spot buys.
This shift could set off a short squeeze, compelling market participants to cover their positions, hence increasing buying pressure on Bitcoin.
Such an event typically drives prices higher, making this level a crucial threshold for Bitcoin’s near-term future.
Next Price Surges
If Bitcoin were to break above the $66,200 level, the next crucial level would be around the $70,300 mark, which would see $16 billion liquidated in short positions.
This would be another wave of liquidations and likely intensify the upward move further into new territory.
These liquidations tend to have a cascading effect, amplifying the price movement and flipping bearish positions into forced buybacks.
The last significant liquidation zone lies at $72,578, with $18 billion in short positions at risk of liquidation.
If Bitcoin reaches that price, then a third wave of buy-side pressure will be triggered to further push the price upwards.
The market will be very volatile, and this zone might be the starting point for a big rally.
Bitcoin’s Bullish Picture
Since the 7th of September, Bitcoin’s Open Interest has been on the rise, a sign of increasing trader participation in leveraged positions.
In the meantime, Bitcoin’s exchange inflows witnessed periodic fluctuating spikes in the last one month. Currently, the inflow is gaining momentum from the recent dip.
This is an indication of increased activity and interest in Bitcoin trading as investors position themselves for any potential price movements.
The market is now on high alert with the way Bitcoin approaches these key liquidation zones.
Such a short squeeze can propel prices sharply higher, especially if the expected cascading liquidations do end up materializing.