The bitcoin price level where leveraged bulls could get whacked

MarketsThe bitcoin price level where leveraged bulls could get whackedBulls are stacking longs, liquidity is thinning and one key level could trigger large liquidations. By Omkar Godbole4 min ago3 min readMake preferred on ShareShare this articleCopy linkX iconX (Twitter)LinkedInFacebookEmailMake preferred on SummaryShow$57,000 is the key liquidation level for bitcoin’s leveraged longs.Thin liquidity could amplify any liquidation-driven sell-off.Despite the downside risks, BTC’s resilience and a potential inverse head-and-shoulders pattern keep the bullish case alive.For bitcoin BTC$64,153.78 traders holding bullish futures bets, $57,000 is the key level, not because it counts as key support from where the market turned higher in early June, but because that’s the level where their bullish bets could be at risk.Understanding why starts with knowing how futures function and the concept of liquidation, the forced closure of leveraged bets by exchanges due to margin shortage. Futures allow a trader to control a large position by depositing only a small amount as collateral upfront. The rest is effectively fronted by the exchange, in the form of leverage. If the bet works as expected, all’s well, and gains get amplified because the position is so much larger than the collateral behind it. But if the market does the opposite of the bet, losses get amplified the same way, and once those losses eat through the trader’s margin, the exchange steps in and closes the position automatically.For the current cohort of longs, $57,000 is the level where positions turn underwater enough that exchanges may have to liquidate, unless traders step in with more collateral. “$57,000 is a key region to watch. If Bitcoin trades down into that area, we could see a massive wave of long liquidations,” Joao Wedson, CEO of crypto analytics platform Alphractal, said. The risk is amplified by thin trading volumes. As CoinDesk reported Monday, the number of active contracts is unusually large re…

The bitcoin price level where leveraged bulls could get whacked

Coins in this story

Discussion

Related stories

XRP slips below $1 even as a Korean regional bank adopts Ripple Payments

Monad, an Ethereum rival, offered early investors up to $60 million to cash out. Almost all said no

Bitcoin climbs above $64,000 while most majors slip