Bitcoin Aims for New Heights Amid Market Liquidations

By: Eliza Bennet

Bitcoin, bolstered by the positive momentum of spot bitcoin ETFs, has hit a record high, pushing its market cap above $1.4 trillion. On Monday, Bitcoin's price was reported to be over $71,000. Along with this surge upward, the rise in bitcoin's price puts a record number of shorts at risk. Any less than 10% move upward from this point would trigger a massive $1 billion liquidation.

This rising tide of shorts presents a potential risk. Those expecting the price to crash after climbing to an all-time high may soon be disappointed as Bitcoin's price continues to soar, nearing $72,000 and increasing the risk of liquidations. Crypto trader and analyst Ash Crypto shared a map indicating a short liquidation leverage that has risen over $1 billion.

An increase in bitcoin price has also affected the market’s liquidations and leverage levels, clearing most leveraged positions above $66,000, setting a solid floor for further price discovery. Unlike the bull market of 2021, the current cycle appears to be eliminating leverage before it can trigger substantial volatility. This could promote a more organic price discovery process, characterized by participant sentiment and valuations as opposed to amplified bets of leveraged traders.

The elimination of leveraged positions has led to a clearer market structure and could potentially pave the way for organic price discovery. The market is likely to reflect the actual market value of Bitcoin, suggesting that conditions are ripe for a more sustained upward trend.