- About $179 million worth of Bitcoin futures could be forced to be liquidated in case the BTC value drops to $61,498.
- Such trading uses borrowed funds to increase profits by a specified multiple, and it increases the market’s fluctuations leading to a chain of forced sales on various platforms.
- The prospect of a liquidation event may cause the stock price to decrease or for a value investor to find an attractive investment opportunity.
Currently, the Bitcoin futures market is set to undergo a massive liquidation. This is where $179.70 million worth of Bitcoin will be wiped out if Bitcoin’s price rises to $61,498. This potential liquidation leverages information that outlines important pricing levels at which leverage has been undertaken. Market and trading participants are keen on Bitcoin as any sudden spike in the price of Bitcoin may lead to massive pump and dump across the exchanges.
Bitcoin’s Price Surge and Liquidation Levels
As evidenced by heatmap data of the futures market, at the moment of writing Bitcoin is trading slightly below critical levels of liquidation. In the following chart, it can be observed that once Bitcoin goes below the $61,498 level, leveraged position worth $179.70 million will be margined out. This is a considerable part of the open interest in the market showing the exposure to the highly leveraged trading activities.
$179.70 million will be liquidated across futures markets if #Bitcoin jumps to $61,498! pic.twitter.com/cRkoU7uIv1
— Ali (@ali_charts) September 18, 2024
Market volatility is mainly intensified by leverage with certain markets, including cryptocurrency ones. Retail traders leverage in an attempt to gain big by trading with large amounts of money that they do not personally have. However, when prices are against these positions, exchanges immediately close the assets for losses which in turn creates more volatility.
Market Reactions and Its Influence
If the price of Bitcoin approaches the $61,498 level, there is potential for a liquidation round. This could lead to considerable erosion of the price, as forced sales generate selling pressure. Also, such a liquidation event is likely to trigger a wider market selloff, affect other digital assets, and increase volatility within the crypto space.
On the other hand, the liquidation could offer a good buying opportunity especially for investors who track such movement. The pressures that come with liquidations result in price swings that might benefit long-term investors by offering stocks at a low price.
In the futures market, Bitcoin remains volatile, and at $61,498, $179 million is at risk of liquidation. Traders should proceed with caution, particularly those who employ high levels of leverage, as the market may quickly change.