Bitcoin dropped down pretty hard not to soon after hitting an all-time high of over $103,000 on Thursday. By Friday, the value had fallen to just under $92,000 for a brief moment, leading to over $1 billion in liquidations. Many traders who had bet on prices going up, known as “long traders,” were hit hard by the sudden downturn. Since then, Bitcoin has recovered and at press-time, the flagship cryptocurrency has regained much of its losses and is happily trading above $100K at $100,350 according to CoinMarketCap data.
What Happened with Futures?
Futures contracts let traders speculate on the future price of Bitcoin without actually owning it. However, when the price moves against their predictions, these positions can be forced to close, or liquidated. In the case of Bitcoin futures, nearly $500 million worth of trades were liquidated. Out of this, $420 million came from long positions.
What Are Liquidations?
Liquidations might sound very serious. Essentially, liquidations happen when a trader borrows funds to make bigger bets (this is called leverage), and the trade moves in the wrong direction. If the losses pile up to the point where the trader can’t meet the required margin (think of it like a safety deposit for the trade), the crypto exchange will automatically close the position. This is done to prevent further losses.
What Caused the Drop?
The fall seems to be the result of traders taking profits after Bitcoin reached its record high. At the same time, data shows that many traders with long positions were taking on too much risk. Exchanges like OKX, where most of the liquidations happened, saw 89% of liquidated trades coming from people betting that prices would keep going up.
$120K next?
Even though the dip was a tough blow for many traders, Bitcoin’s overall demand remains strong. Futures contracts are still attracting interest, and the growing “open interest” (the number of active contracts) shows that the market is far from quiet.
According to analysis by CryptoQuant, Bitcoin’s market structure remains steady, even after the recent wave of liquidations at the $100K level. The next big price target seems to be $120K, but for now, Bitcoin may need to “take a breather” and consolidate before pushing higher. Consolidation is when the price stays within a range, giving the market time to stabilize and regain strength.
Financing rates, which measure the cost of holding certain positions in the market, have dropped from a very high 70% to a more manageable 15%. This cooling off happened after strong sell-side resistance at $100K triggered $277 million in long liquidations. Long liquidations occur when traders betting on higher prices are forced to exit their positions due to losses.
Bitcoin’s weekly performance shows signs of exhaustion, making this period of consolidation important for sustainable growth. Historically, Bitcoin has taken about 20 days to consolidate after big moves, often followed by a stronger price rally. Key price levels to watch include $110K, where sellers may take profits, and $120K, which carries psychological significance for traders. This area may act as another consolidation zone before any further upward movement.
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