1️⃣ At the level of $115,000, about $2 billion in short positions are expected to be liquidated.
Yes, $2 billion, which means there are many traders betting on a price decline.
2️⃣ At the level of $123,000, we may witness liquidation of more than $5 billion.
But what is liquidation?
Liquidation occurs when leveraged trading positions are forcibly closed by the platform. This happens when the price moves in the opposite direction to the trader's expectations, resulting in a total loss of the capital allocated to the trade.
What does $2 billion in short positions liquidation mean?
1️⃣ Short positions: These are positions opened by traders when they expect the price of Bitcoin to fall. In other words, they are betting on a price decline.
If the price of Bitcoin rises significantly and reaches the level of $115,000, traders who opened short positions will start to incur significant losses. Once their losses reach a certain level (based on the leverage used), the platform will automatically close their positions to avoid larger losses, and this is called liquidation.
How can liquidation happen at $115,000?
Currently, Bitcoin is at $108,744. If the price starts to rise quickly due to new liquidity entering or strong positive news, it could reach levels of $115,000.
At this level, the upward movement will cause the liquidation of short positions opened at lower levels.
What is the impact of this on the market?
✔️Impact of liquidation on the market: When short positions of this size ($2 billion) are liquidated, it leads to additional buying pressure (Short Squeeze). This means the market may witness a larger price increase due to the closure of short positions and the purchase of Bitcoin to cover losses.
✔️Liquidation levels: If the price continues to rise and reaches $123,000, a larger liquidation of short positions ($5 billion) may occur, increasing the upward momentum.
Summary:
Even if the current price is below the mentioned levels, the market always moves based on supply and demand, news, and public sentiment. If the price starts to rise and approaches $115,000, a large liquidation of short positions could lead to a very strong upward movement.
In your opinion, what will happen to Bitcoin under these circumstances and what does the market maker think at this moment?
Does he see it as a new opportunity to increase his profits? Will it continue to rise, or is there a correction coming?
Understanding these dynamics is key to achieving success in the crypto world.
Let us help you make decisions and follow us for more in-depth analysis and valuable tips that will help you navigate this volatile market. We are here to provide you with everything you need to be a successful trader.
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