The price of Bitcoin has experienced a lot of volatility in the past few days, resulting in a significant number of liquidations in the market. Traders and analysts are closely monitoring the situation, with Willy Woo sharing his insights on BTC’s short-term price targets. Despite a plunge to around $58,400, the cryptocurrency managed to bounce back above $61K, prompting a surge in liquidations in the futures market totaling $360 million, the majority of which were long positions.
Willy Woo attributed yesterday’s price movements to a cascade of long liquidations in the futures market, with the initial target for leverage wiping at $62.5K. However, speculators continued to add to long positions, fueling further liquidations in a cascading long squeeze. Another contributing factor to the crash was the capitulation of miners who were selling BTC to fund hardware upgrades due to old equipment no longer being profitable. Despite the short-term reversal in price to around $61K, Woo cautioned that BTC is still at risk, emphasizing the importance of monitoring the clearance of leveraged positions in the system.
According to Woo, less than 3% of BTC open interest has been wiped out in the past 24 hours, indicating that the system may not be ready to move up. He highlighted the need for purging futures open interest to ensure a healthy market environment. The analyst’s prediction of short-term technical factors pointing to a reversal seemed to have manifested in the bounce back of BTC price. However, the caution remains that BTC is not yet out of the woods, and further monitoring of leveraged positions is necessary to determine the next steps for the cryptocurrency.
Overall, the recent volatility in Bitcoin’s price has resulted in significant liquidations across the futures market, with long positions being the most affected. Willy Woo’s analysis sheds light on the potential reasons behind the recent price movements, including long liquidations and miners’ capitulation. While BTC managed to bounce back above $61K, caution remains as the market may not be fully prepared for an upward trend without clearing leveraged positions. Monitoring the clearance of leveraged positions will be crucial in determining the future direction of Bitcoin’s price in the coming days.