OnChain College
Bitcoin Liquidations Shed Some Light on Today's Price Moves
What a day for Bitcoin. At the time of writing this, the Bitcoin price is up 15% on the day and is currently hovering around $43.5k. Leverage adds volatility to the market. As price started to drop on Feb 23rd, the move down was accelerated by $25 million in long liquidations. This is seen in the first picture by the orange #1. Price quickly made a U shaped move, and shorts that piled in were caught offsides, resulting in $39m in short liquidations in 1 hour. We saw a similar U shaped move (2) yesterday and today, with an hourly peak of $21M in long liquidations quickly turning into an hourly of $26M in short liquidations. But price kept rising today, and another $31M in shorts were liquidated in an hour merely 7 hours later. Additionally, Bitcoin Open Interest has risen to levels last seen a little over a week ago. What does this mean? My interpretation is that the liquidations this week did not clear out a lot of leverage, and there could be more volatility in the short term.