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With a violent fakeout between $111,000 and $117,000 wiping out a massive $240 million liquidation cluster, the recent price action of Bitcoin demonstrates yet another instance of market manipulation through leveraged overexposure. The market was shaken but significantly cleaner in terms of open interest and risk as a result of the move, which liquidated both late-entry shorts and overconfident longs.
Bitcoin liquidity absorbed
The Binance BTC/USDT liquidation heatmap shows where liquidity has been absorbed most recently. Large clusters were concentrated around $111,000 on the downside and $117,000 on the upside, which is exactly where the most recent Bitcoin fakeout took place. BTC fell into the lower band of liquidity following a severe rejection around $117,000, which caused cascading liquidations before swiftly rising again.
This type of liquidity sweep, which eliminates both sides prior to a possible trend redefinition, is typical of an engineered stop hunt. Technically speaking, Bitcoin is currently trading between $113,000 and $114,000, slightly above its 200-day EMA, which is still a critical level for structural support. A short-term squeeze scenario that may determine the next directional move is being created by the 50-day and 100-day EMAs converging just above the price.
Where is volatility concentrated?
A neutral position is confirmed by the RSI near 50, which indicates that while momentum is balanced, volatility is still present. Now that there has been a significant liquidation reset, the market is in a better position. If spot buying pressure resumes, the system's fragility is eliminated by the decrease in leverage and open interest paving the way for a more stable advance.
The next target is still $120,000-$125,000, where the next liquidity pocket will form if Bitcoin can successfully recover $115,000-$116,000. On the other hand, if you cannot hold above $112,000, you might have to retest the $108,000 range. The $240 million liquidation purge for Bitcoin was essentially a much-needed cleanup.
Overleveraged traders suffered as a result of the fakeout, but the market's foundation was restored. Now that speculative excess has been eliminated, Bitcoin might be ready for a real move that is finally based on spot strength rather than volatility caused by leverage.
Dan Burgin
Vladislav Sopov
U.Today Editorial Team