Bitcoin News Today: BTC's Rally Risks Liquidation Spiral as $1.1B Shorts Mirror FTX Chaos

The cryptocurrency market is on high alert as Bitcoin's price fluctuations threaten to trigger massive liquidations on derivatives platforms. A critical short position valued at $123 million on Hyperliquid, held by a well-known trading address linked to Roobet and Stake.com, faces liquidation if BTC surges to $96,100. The position, opened at an average price of $95,270 with 40x leverage, has already turned from profit to loss as the price dips below the entry point, leaving a margin call distance of just 0.52%. This development adds to a broader wave of market stress, with over $1.1 billion in liquidations recorded in the past 24 hours, including $968 million from long positions, as traders grapple with volatility reminiscent of the 2022 FTX collapse.

The current environment mirrors the darkest days of the crypto winter, with sentiment plummeting to levels not seen since late 2022.

Bitcoin's Relative Strength Index (RSI) has plunged into oversold territory, a condition last observed during the FTX crisis, while the Fear and Greed Index hit an extreme fear reading of 10 earlier this week according to reports. Analysts warn that the market's fragility is exacerbated by heavy leverage, with short positions accounting for 74.7% of $343.89 million in recent liquidations, signaling sustained upward pressure on BTC.

The at-risk Hyperliquid short position is part of a larger pattern of speculative bets turning sour. The same address has short positions in ZEC and XRP nearing liquidation, compounding risks for the trader. Meanwhile, a separate $131 million short position on the platform, held by a whale using 20x leverage, could be liquidated if BTC reaches $111,770. This trader, who has generated $33.12 million in realized profits since September, now faces a $6.36 million unrealized gain at risk according to financial reports.

Market observers are closely watching technical indicators for clues about Bitcoin's trajectory. The asset briefly dipped to $93,000 earlier this week, erasing all 2025 gains and triggering $510 million in liquidations, including a record $44.29 million BTC-USDT position on HTX. Analyst KillaXBT has flagged critical support levels at $93,500 and $89,000–$91,000, warning that a break below $85,000 would invalidate bullish recovery scenarios.

The liquidation risk extends beyond individual traders. Institutional activity and forced buying from short liquidations could create a self-fulfilling prophecy, pushing BTC toward key thresholds. With 15 buy signals versus one sell signal in recent technical analysis and a neutral-to-bullish RSI reading of 66, the stage is set for a potential rally toward $111,770. However, such a move could trigger cascading liquidations, further destabilizing an already fragile market.

As the crypto community braces for potential volatility, the lessons of the FTX era loom large. The current crisis underscores the risks of leveraged trading in a market prone to sharp reversals, with analysts urging caution as Bitcoin navigates uncharted territory.