Bitcoin News Today: Bitcoin drops below $115,000 as liquidity zones trigger liquidations

Bitcoin’s recent sharp sell-off, which saw the asset drop below $115,000, triggered widespread liquidations across key liquidity zones, a common occurrence when leveraged positions face margin calls [1]. The move appeared to follow a familiar pattern where traders take profit after reaching all-time highs, while others open short positions, contributing to the downward momentum [1]. Despite the abrupt correction, however, an uptick in open interest has emerged as a key indicator that traders are beginning to re-enter the market, often with long positions, suggesting confidence in a potential reversal [1].

Hyblock CEO Shubh Varma explained that liquidity had built up on the downside heading into the weekend, creating visible pools of potential liquidation targets. As the weekend concluded, these liquidity zones were swept, reinforcing the idea that thinner weekend markets are more vulnerable to sudden shifts in order flow [1]. According to Varma, large Ethereum unstaking events also contributed to increased supply, though institutional demand remained strong, especially from digital asset treasuries (DATs), which helped fuel the upside move during the week [1].

The weekend’s volatility exposed imbalances in the order book, with slippage metrics spiking and bid-ask spreads widening, leading to a cascade of liquidations [1]. Varma noted that during this period, institutional demand appeared to dry up, leaving the market more susceptible to aggressive selling. However, the post-drop behavior suggests that the market is beginning to stabilize. Open interest surged around the time of the liquidity sweep, indicating that both longs and shorts had opened positions in that range, and many shorts are now trapped, potentially serving as a support level for the price [1].

While the recent correction highlights the fragility of leveraged positions, the accumulation observed in the wake of the sell-off points to a resilient market. Traders and institutional investors are increasingly viewing the dip as an attractive entry point, with many suggesting that the current environment could act as a catalyst for a broader recovery [2]. The “Flip Zone”—a critical turning point in Bitcoin’s price action—has also emerged as a potential floor, offering a psychological level that may prevent further downward movement [1].

Overall, the combination of an uptick in open interest and the technical resilience seen in recent charts indicates that the market is not capitulating. Instead, it appears to be entering a consolidation phase where buyers are stepping in to absorb oversold conditions. This dynamic has led to speculation that Bitcoin may be positioning itself for a more sustained rally, especially as liquidity continues to be swept and reabsorbed at lower levels [2]. Analysts, however, caution that without a period of rebuilding, breaking through overhead resistance may remain a challenge [5].

Source: [1] Bitcoin 'liquidity zones swept' but uptick in open interest hints at BTC recovery (https://cointelegraph.com/news/bitcoin-liquidity-zones-swept-but-uptick-in-open-interest-hints-at-btc-recovery)

[2] BTCUSD - Bitcoin 'liquidity zones swept' but uptick in ... (https://mx.advfn.com/bolsa-de-valores/COIN/BTCUSD/crypto-news/96662103/bitcoin-liquidity-zones-swept-but-uptick-in-op)

[5] Bitcoin (BTC) Price prediction (https://www.bitget.com/price/bitcoin/price-prediction)