The liquidation heatmap shows much of the liquidation risk clustered above current prices, not below. This means that a downward move is unlikely to be amplified by a cascade of forced sales; the real danger lies in those who are positioned in the open.
Open interest increased by around 0.28% in the last 24 hours, even though the price fell by around 3%, indicating that traders are not closing their short positions, they are doubling down and betting on a breakout of the $58,000 support level. Funding rates are also negative, another sign that the market is paying a premium for downside exposure.
The depth of the spot market builds strength beneath a delicate surface; CoinGlass data shows that there are a total of 6,900 BTC ($409 million) in bids on the order book between the current price and $50,000, while there are only 1,570 BTC ($93 million) in pending sell orders between the current price at $70,000, creating a bullish supply bias.
Typically, in scenarios like this, when a clearly overpriced trade is identified, astute traders and market makers will target this weakness and move the price in the other direction. This could cause those who are short to close their positions to avoid paying funds and prevent liquidation.
