Bitcoin News Today: Bitcoin's 6.72% Drop Triggers Liquidity Sweeps and Open Interest Surge

Bitcoin’s recent price action has sparked renewed debate among traders and analysts as key liquidity zones were effectively “swept” during a sharp pullback from its all-time high of $124,474 [1]. This sudden sell-off saw the cryptocurrency dropping more than 6.72% to levels below $115,000, a move that many had not fully anticipated. According to Hyblock co-founder and CEO Shubh Varma, the pattern observed over the weekend pointed to a buildup of liquidity on the downside, which ultimately became a target for aggressive liquidation as market conditions deteriorated [1].

The sell-off was largely attributed to profit-taking by short-term holders and a simultaneous rise in short positions, both of which contributed to the downward pressure [1]. However, Varma noted that these liquidity grabs were accompanied by an emergence of supply in the order book and onchain, particularly driven by large ETH unstaking events [1]. Despite this, institutional demand remained strong during the trading week, with several digital asset treasuries (DATs) making significant BTC and ETH purchases, suggesting that demand was outpacing the newly available supply [1].

One key observation from the recent volatility is the uptick in open interest, which has risen as traders continue to open new positions rather than close existing ones [1]. This increase in open interest typically indicates heightened market participation and may signal the beginning of a recovery phase. According to Varma, the open interest spike coincided with the same liquidity zones that were swept, creating a potential support level as both longs and shorts were active in that price range [1]. The presence of trapped short positions could further support a bullish reversal if buying pressure resumes.

Technically, Bitcoin’s move past critical sell-side liquidity below recent lows has formed a Change of Character (CHoCH) pattern on the 30-minute chart—a classic bullish reversal signal [1]. At the same time, the asset has re-entered a key liquidity zone aligned with the slow trend structure on the 4-hour chart, raising the possibility of a new accumulation phase [1]. A parallel accumulation channel has also been broken out of, reinforcing the likelihood of further upward movement [1]. Additionally, the sweep of liquidity around the 3323 zone has already triggered a reversal in momentum, indicating that the short-term trend may be turning in favor of buyers.

While Bitcoin remains sensitive to macroeconomic developments—such as the recent Producer Price Index (PPI) data release—its behavior is also shaped by onchain and order book dynamics [1]. The weekend closure of traditional markets exacerbated order flow imbalances, with slippage metrics and bid-ask spreads flipping bearish [1]. This imbalance likely triggered a cascade of liquidations, further deepening the correction. However, the return of institutional activity and a strong open interest signal suggest that the downside may be limited and that a recovery is within reach.

The cryptocurrency market remains in a state of flux, with Bitcoin often serving as a bellwether for broader sentiment. While macroeconomic and regulatory uncertainties persist, the technical picture currently favors a rebound. Traders are closely watching price action, liquidity structures, and open interest levels to gauge the next potential move in the market.

Source: [1] https://coinmarketcap.com/community/articles/68a3c6865c43426cd433cfc6/