Bitcoin on the Brink: $21.77 Billion in Shorts Could Be Liquidated if BTC Breaks $70,500
Bitcoin’s Bullish Momentum: A Potential Short Squeeze on the Horizon?
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Bitcoin (BTC) continues to climb, holding above $60,000 and solidifying gains from September 13th. The recent price action suggests buyers are back in the game, likely fueled by the US Federal Reserve’s decision to cut interest rates on September 18th.
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As trading volume picks up, one analyst on X has identified a compelling scenario. Based on market data and the liquidation map of Binance perpetuals, this analyst believes that if Bitcoin surpasses $70,500, a massive $21 billion worth of short positions could be liquidated.
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Understanding Liquidations in the Perpetuals Market
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Liquidations occur in the perpetuals market, where leveraged traders bet on market volatility to profit. There are \”longs,\” who anticipate price increases, and \”shorts,\” who expect prices to fall. Both sides leverage borrowed funds, with their collateral acting as an \”insurance\” for the exchange. If the market moves against a trader, the exchange forcefully sells their position to cover losses.
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The current market situation suggests a potential short squeeze. Bitcoin needs to climb approximately 11% from its current price to reach $70,500. However, the immediate liquidation level lies around $66,000, marking August’s peak. If this level is breached, and trading volume continues its upward trajectory, the resulting rally could easily propel Bitcoin towards the $70,000-$72,000 liquidation zone.
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The Significance of the $70,000-$72,000 Resistance Zone for BTC Traders
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Bitcoin bulls have faced resistance at $72,000 since the retest in June. A decisive close above $70,000 could trigger a short squeeze, potentially leading to a surge toward $73,800 and even new all-time highs.
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Recent Liquidation Data
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Coinglass data on September 19th reveals that over $69 million of leveraged shorts were liquidated in the last 24 hours. Simultaneously, more than $13 million worth of longs were forcibly closed due to market volatility. In the past day, over 66,000 crypto traders experienced liquidations, with the largest single BTCUSD position, valued at over $8.9 million, being closed on Bybit, a perpetuals trading platform.
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This scenario highlights the potential for significant market movement and underscores the importance of understanding the dynamics of leveraged trading in cryptocurrencies. The coming days could witness a dramatic shift in the Bitcoin market, driven by the potential for massive liquidations.
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Disclaimer: This article is for informational purposes only and should not be construed as financial advice. It is essential to conduct thorough research and consult with a qualified financial advisor before making any investment decisions.