Bitcoin is trending higher at spot rates, hovering above $60,000 and confirming gains from September 13. Judging by the price action on the daily chart, buyers appear to be back in the picture. The confidence follows the US Federal Reserve’s (Fed) decision to cut rates by 50 basis points on September 18.
Over $21 Billion in Shorts Will Be Liquidated if Bitcoin Breaks $70,500
As buyers double down on BTC, noting the sharp increase in trading volume over the past day, an analyst at X identified an interesting observation if the bulls continue to dominate. Citing market data and Binance’s perpetual bond liquidation map, the analyst said that if Bitcoin soars above $70,500, over $21 billion worth of short positions will be liquidated.
Liquidation occurs in the perpetual market, where leveraged traders aim to reduce market volatility to make a profit. There are long positions, or traders who bet on bulls to push prices higher, and stocks, who bet on prices to fall.
These positions are leveraged in both cases, meaning they borrow funds from the exchange. The collateral, in this case margin, acts as “insurance” for the exchange. As a result, they will forcibly sell it if the market moves against the trader.
Looking at the state of price action on the daily chart, Bitcoin needs to expand by about 11% from spot rates of $70,500 to be reached. The immediate liquidation level is around $66,000, marking August highs.
If this level is broken and the rally is fueled by increased trading volume, the resulting recovery could easily be the basis for the bulls to overcome the intense sell-off pressure around $70,000 and $72,000.
$70,000 and $72,000 resistance zone is crucial for BTC traders
Bitcoin bulls have been struggling to break $72,000 since the retest in June. Hence, any firm and decisive close above $70,000 could trigger a short squeeze. Therefore, it is highly likely that BTC could retest $73,800 and even print new all-time highs.
Currency currency data on September 19 shows that over $69 million in leveraged short positions were liquidated in the past 24 hours. Meanwhile, over $13 million in long positions were also forcibly closed due to market volatility.
Over 66,000 crypto traders were liquidated in the past day, and the largest leveraged BTCUSD position worth over $8.9 was closed in Bybita perpetual trading platform during this period.