Bitcoin Price Drop Below $107,000 Could Trigger $880 Million Liquidations

On June 12, data from Coinglass indicated that if Bitcoin's price falls below $107,000, the cumulative liquidation pressure on long positions across major centralized exchanges (CEXs) would amount to $880 million. This significant figure highlights the potential market impact if Bitcoin were to drop below this threshold, as it would trigger a wave of liquidations, causing a substantial sell-off in the market.

Conversely, if Bitcoin's price surges above $109,000, the cumulative liquidation pressure on short positions across major CEXs would reach $326 million. This scenario suggests that a sharp increase in Bitcoin's price could lead to a substantial number of short positions being liquidated, potentially driving the price even higher as short sellers are forced to close their positions.

It is important to note that a liquidation chart does not display the exact number of contracts pending liquidation or the precise value of contracts being liquidated. Instead, the bars on the liquidation chart represent the relative significance of each liquidation cluster compared to neighboring clusters, indicating the intensity of liquidations at specific price levels. Higher "liquidation bars" signify stronger reactions due to liquidity waves when the price reaches those levels, underscoring the potential market volatility at these price points.

Therefore, the liquidation chart illustrates the potential impact when the underlying asset's price reaches certain levels. Higher "liquidation bars" indicate stronger reactions due to liquidity waves when the price reaches those levels. This information is crucial for traders and investors to understand the potential market dynamics and make informed decisions based on the liquidation pressure at different price levels.