Author: Shen Ge Talks Trends
When I refreshed Coinglass's liquidation data in the early morning, I was reviewing the K-line chart—$262 million in liquidations across the network in the past 24 hours, with long positions at $152 million and short positions at $110 million, along with liquidation amounts of $93.41 million for Ethereum and $41.62 million for Bitcoin, almost directly slapping the words 'extreme market volatility' in the face of all investors. As a veteran who has been in the cryptocurrency space for seven years, this level of liquidation is not the first I've seen, but every time I see it, I remind myself: the money made in the cryptocurrency market is never from 'gambling on high or low', but from 'calculating probabilities'.
Let's break down the signals behind this set of data, which is also my daily 'pre-market homework'. From the asset perspective, the liquidation amount for Ethereum is 2.2 times that of Bitcoin, which is crucial—it's important to know that Bitcoin, as a 'market anchor', usually has lower volatility than Ethereum, but this time Ethereum has become the 'disaster area'. The core reasons are twofold: first, the recent expectations of ETH staking unlock combined with short-term liquidity fluctuations in the DeFi ecosystem have intensified the capital's long-short game on Ethereum; second, many retail investors are watching the 'Ethereum halving expectations' and have opened long positions too early, overlooking the current macro capital situation (the Federal Reserve's fluctuating interest rate expectations) that is suppressing cryptocurrencies; this kind of 'one-sided betting' is most prone to being liquidated in volatility.
Looking at the long-short structure, the $152 million in long position liquidations far exceeds the short positions, indicating a significant 'long squeeze' in the market previously. I warned in the community last week that when the long position ratio of a certain asset exceeds 60% for three consecutive days, one should be wary of the 'longs killing each other' risk—this data just happens to confirm that point. Many investors chase long positions after a short-term rebound without calculating 'where the support level is, how to set the stop-loss', and end up watching their positions get liquidated; this is also the reason I have always emphasized that 'trading without a stop-loss is essentially giving money to the market.'
Next, let's talk about my response plan, which is also key to professionalism. First, in the short term, I will keep my position controlled within 30%, focusing on two indicators: first, the support level of Bitcoin at $26,000 (if it drops below, it may trigger a new round of panic selling), and second, the amount of ETH being unlocked (when more than 12,000 ETH are unlocked daily, one should be wary of selling pressure). Secondly, I will make 'hedging arrangements' during volatility, for example, opening Bitcoin put options with 10% of my position while also paying attention to oversold opportunities in second-tier coins like SOL and ARB—these types of coins often rebound more vigorously than Bitcoin after the market stabilizes, but the prerequisite is to wait for the 'end of the liquidation wave' (usually when the total network liquidation volume decreases for three consecutive hours).
Finally, let's talk about what everyone is most concerned about: is it a risk or an opportunity now? My judgment is 'short-term risks are not entirely out, but mid-term opportunities are brewing'. From historical data, after a single liquidation exceeds $200 million, the market typically goes through a 1-3 day consolidation period. During this time, blindly bottom-fishing is easy to 'catch falling knives', but one cannot completely leave the market— the rule of the cryptocurrency market is that 'extreme volatility will always be followed by correction'; the key is to find a 'margin of safety'. For example, I will wait for Ethereum to drop below $1600 and for the RSI indicator to be below 30 before considering building positions in batches, which is both a respect for 'panic emotions' and a commitment to 'probability advantage'.
Many newcomers will ask: 'Shen Ge, how can you be sure your judgment is correct?' In fact, I never claim to be 'absolutely right', but I use three principles to reduce the cost of mistakes: first, never invest more than 20% of funds in a single asset; second, before opening a position, calculate the 'worst-case scenario' (for example, if Ethereum drops below $1500, my stop-loss will keep losses within 5%); third, spend 2 hours each day reviewing 'wrong trades'—for example, if I closed a SOL long position too early last time, I will summarize whether it was due to 'misreading indicators' or 'emotional interference'.
There has never been a 'foolproof' secret in the cryptocurrency market, only the logic of 'losing less and earning more'. This $262 million liquidation is not the end; there will be more volatility in the future, but remember: those who can survive in the cryptocurrency market will always be those who 'understand the data, control their positions, and withstand emotions'. Moving forward, I will provide real-time updates on key points for ETH and BTC in the community, and share the details of my position adjustments. Following the rhythm is much more reliable than blindly charging forward.
