Bitcoin’s $117k: Short Squeeze or Long Liquidation?

Source: [1] ChainCatcher (https://www.chaincatcher.com/en/article/2205500) [2] Blockchain.News (https://blockchain.news/flashnews/9-billion-in-bitcoin-shorts-set-for-liquidation-at-117-000-key-crypto-price-level-for-traders) [3] BitPinas (https://bitpinas.com/cryptocurrency/bitcoin-117k/)

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Derivatives data indicates that Bitcoin's price movement toward $117,000 could trigger a significant short liquidation event on major centralized exchanges. According to Coinglass data, if Bitcoin breaches this threshold, cumulative short liquidation volume across platforms could reach $594 million. This figure reflects concentrated leverage at the level, where a sustained price surge would force short sellers to cover positions, potentially amplifying upward momentum. Conversely, a drop below $114,000 could see long liquidations totaling $656 million, underscoring the heightened volatility in the derivatives market.

The liquidation risk is amplified by record open interest and leverage levels. As of late September 2025, total crypto futures open interest surpassed $220 billion, with Bitcoin perpetual futures trading volumes 8–10 times higher than spot volumes. Analysts warn that leveraged positions above and below $117,000 create a "high leverage liquidity trap," where price movements near these levels could trigger cascading liquidations. For instance, a $104,500 drop could see over $10 billion in long liquidations, while a $124,000 rally might result in $5.5 billion in short liquidations.

Market dynamics suggest a short squeeze scenario is plausible. Data from June 2025 highlighted $9 billion in Bitcoin shorts at risk of liquidation at $117,000, a figure that appears to have stabilized by September as institutional demand and macroeconomic factors—including the Trump administration’s pro-crypto policies and ETF inflows—strengthened Bitcoin’s fundamentals. On-chain metrics also show reduced retail sell pressure, with institutional holdings and macroeconomic tailwinds (e.g., tariff adjustments, ETF inflows) bolstering long-term bullish sentiment.

Traders are advised to monitor price action near $117,000, where liquidity clusters could trigger sharp volatility. While short sellers dominate current leverage exposure (94.69% of recent 4-hour liquidations), a sustained breakout could reverse this dynamic, shifting risk to long positions. The interplay between derivatives and spot markets remains critical, as leveraged liquidations often drive rapid price corrections. Analysts emphasize limiting position sizes and using delta and open interest metrics to gauge potential inflection points.

The broader regulatory landscape also influences market behavior. The U.S. GENIUS Act and EU’s MiCA framework have standardized stablecoin oversight, reducing regulatory arbitrage. However, divergent approaches to CBDCs and market structure may extend volatility cycles. For now, Bitcoin’s path to $117,000 hinges on maintaining institutional inflows and macroeconomic stability, with derivatives data serving as a barometer for systemic risk.

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[2] Blockchain.News (https://blockchain.news/flashnews/9-billion-in-bitcoin-shorts-set-for-liquidation-at-117-000-key-crypto-price-level-for-traders)

[3] BitPinas (https://bitpinas.com/cryptocurrency/bitcoin-117k/)

[9] WH Partners EU News (https://whpartners.eu/news/comparing-the-u-s-genius-act-to-eus-mica-a-transatlantic-clash-in-crypto-regulation/)