Bitcoin’s Recent Rally Sparks Interest in Futures Positioning
Bitcoin’s (BTC) strong 7.4% rally, which began in the first week of January, has shifted markets’ focus back to futures positioning, where liquidation data suggests price action could be asymmetrical. This sudden surge has caught the attention of investors and analysts alike, with many trying to make sense of the potential implications on the market.
Key Takeaways:
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Over $10.6 billion in long liquidations are below $84,000, versus just $2 billion in short liquidations above $104,000.
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Hyperliquid retail positioning shows that short positions are more vulnerable to upside moves than long positions to downside moves.
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To confirm a structural reversal, Bitcoin needs to recapture the $100,000 cost base.
Liquidation Imbalance Increases Volatility Risk for BTC
According to CoinGlass, about $10.65 billion in leveraged long positions would be liquidated if Bitcoin hits $84,000 again. In contrast, only about $2 billion in short positions face liquidation if BTC rises to $104,000.
BTC liquidation map. Source: CoinGlass
This imbalance is significant because liquidations can act like forced market orders. A move lower towards $84,000 poses the risk of long-term liquidations, increasing selling pressure. On the bright side, fewer short positions mean less fuel for a squeeze unless positioning changes quickly.
Hyperliquid Retail Positioning
However, with hyperliquid, the outlook is different. Crypto trader ChimpZoo highlighted that retail traders are disproportionately short, noting that a rally could liquidate around 6,000 BTC worth of retail shorts, compared to just 2,000 BTC of retail longs in a similar move lower.
BTC liquidation map on Hyperliquid. Source: CoinGlass
Such a move would see approximately 3,860 BTC in long positions liquidated on a downward move, compared to approximately 4,100 BTC in short positions on an upward move.
The $100,000 Level Remains the Key Structural Test
Despite the liquidation-driven momentum, crypto analyst Dan warned that a straight-line rise to new all-time highs is unlikely. First, Bitcoin needs to regain its six- to 12-month bearer cost base to confirm a trend reversal.
Bitcoin realized price UTXO ages and cost basis. Source: CryptoQuant
This level is currently around $100,000. A sustained break above would signal a return to a bullish market structure and open room for further upside. A rejection would suggest that the overall downtrend remains intact despite recent initial strength.
Technical Perspective
From a technical perspective, short-term risks exist even below current prices. Bitcoin could retest the weekend CME gap from $90,600 to $91,600, with another gap further down between $88,170 and $88,700 still unfilled.
Bitcoin CME gaps have been forming over the past two weeks. Source: Cointelegraph/TradingView
If BTC rejects resistance near $96,000, these gaps could come back into play later this month.
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This article does not contain any investment advice or recommendations. Every investment and trading activity involves risks and readers should conduct their own research when making their decision. While we strive to provide accurate and up-to-date information, Cointelegraph does not guarantee the accuracy, completeness or reliability of the information in this article. This article may contain forward-looking statements that are subject to risks and uncertainties. Cointelegraph will not be liable for any loss or damage arising from your reliance on this information.
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