- Bitcoin dropped over 2% from a daily high near $120,000, pulling in market liquidity as expected.
- More than $500 million in cryptocurrency positions were liquidated in the past 24 hours.
- Market analysts forecast a possible deeper decline for Bitcoin, with support near $113,000.
- Open interest for altcoin derivatives hit record levels above $40 billion, raising volatility concerns.
- Experts warn that high leverage and market “froth” could increase market instability.
Bitcoin fell over 2% from its daily peak of about $120,000 on Wednesday, mirroring predicted moves to absorb liquidity during the Wall Street opening. The drop occurred as traders began setting their sights on new potential price floors for the cryptocurrency.
According to data from Cointelegraph Markets Pro and TradingView, the sell-off followed a surge past $120,000 after the daily opening, but the upward momentum did not hold. More than 176,000 crypto traders experienced liquidations totaling approximately $517 million across digital assets in the last 24 hours, with the largest single position being nearly $4 million on Binance.
Updated figures from CoinGlass show new order activity is clustering near the current spot price. The liquidity of long and short high leverage is very juicy, CoinGlass previously stated.
Analysts say the current pattern is not a sustained breakout. Crypto trader Michaël van de Poppe said in a post, Again a liquidity sweep and back in the range, which makes it likely that we’re going to retest the lows of the range again. Another analyst, Crypto Virtuos, identified a key support level at $113,000, based on Fibonacci retracement calculations, and said there could be a short-term correction. He remains optimistic about a rebound, indicating a possible future target around $138,000.
Meanwhile, onchain analytics firm Glassnode highlighted that open interest (OI), which measures the total number of outstanding derivative contracts, reached an all-time high above $40 billion for four leading altcoins. Glassnode warned this environment may lead to sharp market swings. Such conditions point to a degree of froth starting to form in the market, and may leave it more susceptible to sharp volatility, the firm said in its latest newsletter, The Week Onchain.
Elevated leverage allows traders to control larger amounts with less capital, which according to Glassnode, can amplify both upside and downside volatility. As a result, the digital asset market could become more fragile and responsive to sudden price moves.
This article does not provide investment advice, and readers should conduct their own research before making financial decisions.
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