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More than $25 million in Bitcoin futures have been liquidated over the last hour with longs contributing to 98% of the total liquidations.
After a strong push above $30,000 on Tuesday, the world’s largest cryptocurrency Bitcoin (BTC) has come under heavy selling pressure once again. Over the last hour from press time, the BTC price came crashing down losing by more than $1,000 amid heavy liquidations.
As of press time, the Bitcoin price is down by more than 2% and is currently trading at $29.228 levels. However, the recent sell-off in Bitcoin doesn’t seem to come from any fundamental reason.
In this long-squeeze event, more than $25 million in Bitcoin futures have been liquidated over the last hour, wherein the longs made 98% of the total position. Referring to the open interest or the total number of contracts in the futures market, Vetle Lunde, a senior analyst at K33 Research, told CoinDesk:
“Seems to be more of an leverage wash out. Binance OI in BTCUSDT perps fell 5.1% in 15 minutes, effects more severe in ETH with larger liquidation volume than BTC.”
BTC liquidation basically happens when an exchange forcefully closes a trader’s leveraged position due to a partial loss or even a total loss of their initial margin. They typically happen as investors are unable to meet the margin requirements for a leveraged position since they don’t have sufficient funds to keep the trade open.
Macro Conditions to Affect Bitcoin Price?
So far in 2023, bitcoin has shown strong resilience to macro events in the market and the looming banking crisis. However, considering the fact that the BTC price is already up by 80% so far in 2023, it could see some volatility with future macro events.
The recent bitcoin price action coincides with the unexpectedly high UK’s March inflation numbers of more than 10%. “The hotter-than-expected UK CPI may have weighed over risk assets, including BTC. But the gravity of the reaction has been far far more severe than in other asset classes,” said Lunde.
During an interview with CoinDesk TV’s “First Mover” program, Kaiko senior research analyst Dessislava Aubert said that the ongoing strength of the Bitcoin price rally would depend on liquidity. “We have seen that markets are expecting great cuts in the second half of the year. So there is still a lot of uncertainty around whether this will be the case or not. Ultimately, it will depend on how US monetary policy turns out,” she said.
However, just two days back, K33 Research analyst Vetle Lunde told CoinDesk that the current Bitcoin (BTC) resembles closeness with the 2019 rally and the BTC price could peak to $45,000 by next month. In a note to clients, he wrote:
“Bottoms in both cycles lasted for approximately 370 days. And the peak-to-trough return after 510 days of both cycles reached 60%. In 2018, the bear market rally topped 556 days after the 2017 peak, on June 29, 2019, with a 34% drawdown from the peak. While history is far from likely to repeat in a similar fashion if the fractal were to continue – BTC would peak around May 20 at $45,000.”
Read other Bitcoin news on Coinspeaker.