Bitcoin’s 11% weekly gains have some traders worried that the market may witness one last retracement before BTC continues its rally to new all-time highs.
Bitcoin long liquidations may be at risk
“Current trading activity around 68.4k is linked to earlier volatility from July 29, when prices dropped to 49k just five days later,” pseudonymous derivatives trader TheKingfisher said in an Oct. 17 post on X.
The recent spike in Bitcoin (BTC) volatility suggests that “hedging is getting more expensive, and leverage is costing more” as volatility continues to rise, the analyst wrote.
“Even traders using 50x leverage who bought at the top haven’t been liquidated yet, with prices holding at 67,350,” TheKingfisher said, adding that “there’s a 62.48% chance of liquidation within 24 hours.”
Moreover, TheKingFisher highlighted that the liquidity pool is expanding and that when this happens, a “Darth Maul candle” type of exit may occur.
“A drop to 61.3k would be painful.”
Bitcoin liquidation map. Source: TheKingfisher
Meanwhile, MN Capital founder Michael van de Poppe shared similar sentiments, opining that Bitcoin was following the same pattern that has held over the last seven months.
Van de Poppe shared the following chart in an X post showing Bitcoin’s latest run above $68,000, which saw the bulls take the supply-side liquidity at around $65,000.
According to the chart, Bitcoin price is likely to drop first to collect the demand-side liquidity around $64,130 before another leg up.
“I think we’ll correct slightly, the final correction, and then, from next week onward, pushing toward a new all-time high.”
BTC/USD 12-hour chart. Source: Michael van de Poppe
Furthermore, the recent surge in Bitcoin Futures open interest (OI) has left some analysts wary about a possible pullback to flush out long positions.
On Oct. 16, CME Bitcoin futures notional OI hit an all-time high of 179,745 BTC, worth about $1.2 billion at current rates, as K33 Research Senior analyst Vetle Lunde noted.
“Open interest has grown by a massive 32,440 BTC since Oct. 10 - and active market participants drive this growth, seeing a weekly growth in exposure of 40%.”
CME Bitcoin Futures OI. Source: K33 Research
Related: Ethereum price crashes often follow ETH open interest peaks — Will history repeat?
What if surging OI is bullish for BTC price?
Still, not all analysts agree that surging OI is a precursor for a sharp price correction.
Pseudonymous Bitcoin trader Wicked said the recent surge in OI on CME Bitcoin futures to all-time highs “signals further bullishness” for the largest cryptocurrency by market capitalization.
For crypto futures and information platform CoinGlass, the surge in Bitcoin futures OI “signals a significant price movement ahead.”
Source: CoinGlass
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.