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Home Latest News Market $500M in crypto futures liquidated as Bitcoin dips below $34K

$500M in crypto futures liquidated as Bitcoin dips below $34K

Nearly $500 million worth of cryptocurrency futures positions were liquidated in the last 24 hours. The mass liquidation of positions happened before the price of Bitcoin dipped below $34,000 on Jan. 17.

Overnight, the price of Bitcoin rose by 6.7% from $35,500 to roughly $38,000. At the same time, the futures funding rate sharply increased, indicating an overleveraged market.

As reported by Cointelegraph, the funding rate of the Bitcoin perpetual swap futures contract surged to around 0.07%.

Considering that the average funding rate normally hovers at about 0.01%, the futures market was overcrowded on the way up towards $38,000.

Therefore, Bitcoin price began to drop when several large sell orders hit the market at just above $38,000. The overheated futures market further intensified the correction.

In general, $500 million in liquidation is not a large figure compared to the last week, for instance, when Bitcoin saw $1 billion in futures contracts liquidated on peak days.

But the drop has not led the futures market’s open interest to decline, causing concerns for a bigger pullback.

A pseudonymous trader known as “Salsa Tekila” stated that if Bitcoin falls below $30,000, it would enter “bear market territory.” Accordingly, in the short term, it is crucial for BTC to maintain $30,000 as a macro support area. He stated:

“If we go below 30k it’s bear market territory. We’d have enough underwater bagholders to keep us down for a long while. Until then, could go either way I reckon. If reclaim and hold above 40k, I think 50-60k vicinity plausible. Me thinking $BTC is topped is a bias, not a trade.”

In addition, the open interest in the futures market is still skyrocketing, according to CryptoQuant CEO Ki Young Ju. All this time, the on-chain signals that indicated buyer demand have stagnated in the last few days.

Ki wrote that the market is uncertain and that it may retest $30,000 again. He said:

“People trade $BTC with low leverage, open interest is skyrocketing, and the long-short ratio looks neutral. Strong on-chain buying signals that have driven this bull market hasn’t come up so far. $BTC might retest 30k, so I don’t have any position now in this uncertain market.”

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