Bitcoin News Today: Bitcoin Below $116,000 Triggers $677M Long Liquidations as $120,000 Short Risk Rises

Bitcoin faces a critical price threshold as market data suggests that a drop below $116,000 could trigger a significant wave of long-position liquidations on major centralized exchanges (CEXs). According to Coinglass data, the cumulative liquidation intensity for long positions at this level would amount to $677 million, signaling a potential cascade of selling pressure that could exacerbate downward momentum in the cryptocurrency market. Conversely, if Bitcoin rallies above $120,000, the same data indicates that short-position liquidations could reach $259 million, highlighting the heightened sensitivity of leveraged positions near these price levels [1].

The liquidation intensity metric, however, is not a direct measure of contract value or volume. Instead, it reflects the relative significance of liquidation clusters at specific price points compared to neighboring levels. Higher bars on liquidation charts—such as those observed at $116,000 and $120,000—indicate greater potential for market reactions if prices breach these thresholds. This is because a surge in liquidations at a particular level can create a self-reinforcing cycle, where forced selling by leveraged traders accelerates price declines, further triggering additional liquidations.

The data underscores the precarious positioning of leveraged traders, particularly those holding longs below $116,000. A breakdown in Bitcoin’s price action near this level could lead to a liquidity crisis, where the volume of liquidations outpaces market depth, causing sharp volatility. Such scenarios are not uncommon in crypto markets, where leverage levels often exceed those in traditional asset classes. However, the $677 million figure represents a concentrated risk point, as it aggregates the exposure of major CEXs rather than individual platforms. This aggregation suggests that a single price movement could broadly impact the ecosystem, rather than being isolated to a single exchange’s liquidity pool.

Analysts caution that while liquidation intensity is a useful indicator, it does not account for broader market dynamics such as macroeconomic factors, regulatory developments, or shifts in institutional participation. For instance, a surge in short-position liquidations above $120,000 could theoretically benefit bulls by reducing bearish pressure. Yet, the magnitude of these potential counterbalances remains speculative, as the data does not quantify their likelihood.

Investors and traders are advised to monitor Bitcoin’s behavior near $116,000 and $120,000 closely, as these levels could act as psychological and technical fulcrums. The risk of a liquidity cascade increases in fast-moving markets, where algorithmic trading strategies and automated liquidations amplify price swings. Retail traders, in particular, are urged to assess their leverage levels and risk management protocols, given the heightened volatility associated with such price points.

In summary, the Coinglass data provides a stark warning about the fragility of leveraged positions in the current market environment. While the $677 million liquidation pressure figure is specific to CEX longs, it highlights the interconnectedness of crypto markets and the potential for cascading effects. Market participants must balance the risks of leveraged trading with the realities of liquidity constraints, especially in periods of high volatility.

Source: [1] [title: If Bitcoin falls below $116,000, the mainstream CEX long liquidation pressure will reach $677 million] [url: https://www.theblockbeats.info/en/flash/304413]