📉 Sharp Decline in Binance Open Interest:
* Binance’s Open Interest (OI) saw a sudden 5% drop today as Bitcoin’s price plummeted sharply from $124K to below $118K within a short period.
* Such a decline often reflects traders exiting the market or closing leveraged positions in response to price volatility, suggesting a shift in sentiment from bullish to cautious.
🔻 Cumulative Net Taker Decline:
Simultaneously, cumulative net taker volume plummeted by -$1.89 billion.
* This steep drop indicates aggressive selling or the closure of late long positions.
* Historically, similar declines in net taker volume have coincided with local bottoms on short-term timeframes, hinting at potential exhaustion in selling pressure.
* The timing of this move suggests that traders who entered long positions near recent highs are now capitulating.
🧯 Late Long Position Liquidations
* The data suggests a probable scenario: late long positions, initiated just before Bitcoin reached its peak, are now being closed in large numbers.
* These positions, taken in anticipation of further upside, are now underwater due to the price retracement.
* Their closure contributes to the drop in open interest and net taker volume.
📉 BTC Liquidation Analysis: Long Squeeze in Play
* Liquidation data shows that the latest round of forced position closures was concentrated in late long positions, with the Net Liquidations 8H Change spiking to $130 million.
* This pattern indicates a long squeeze—a scenario where falling prices trigger cascading sell orders from overleveraged buyers.
❄️ Funding Rate Compression: A Confirming Indicator
* Further supporting the long squeeze hypothesis is the drop in Binance’s funding rate to just 0.006%.
* Lower funding rates often precede or accompany liquidation events, as traders lose incentive to maintain bullish exposure.
* It’s a textbook signal of deteriorating confidence among derivatives traders.
Written by Amr Taha
