Bitcoin's $87,000 Surge Could Trigger $474M Short Liquidations

According to data from Coinglass, if Bitcoin surpasses the $87,000 mark, the total short liquidation volume on major centralized exchanges (CEXs) is projected to reach $474 million. This significant figure highlights the potential market impact if Bitcoin's price reaches this threshold, as it indicates a substantial amount of short positions that could be liquidated, leading to a potential price surge.

Conversely, if Bitcoin's price drops below $83,000, the cumulative long liquidation volume on major CEXs is expected to hit $324 million. This scenario suggests that a price decline to this level could trigger a wave of long position liquidations, potentially causing a further drop in Bitcoin's value due to the forced selling of long positions.

It is important to note that the liquidation chart provided by Coinglass does not display the exact number of contracts to be liquidated or the precise value of the liquidated contracts. Instead, the bars on the chart represent the relative importance of each liquidation cluster compared to adjacent liquidation clusters, effectively measuring the intensity of liquidations at specific price levels.

This intensity metric is crucial for understanding the potential market reaction at different price points. A higher "liquidation bar" indicates that the price of the underlying asset will experience a more intense reaction due to a liquidity cascade when it reaches that level. This information is valuable for traders and investors as it provides insights into potential price movements and market volatility based on liquidation events.