Bitcoin (BTC) traders remain sensitive despite small price movements as data shows liquidation is increasing.
As BTC/USD approached $21,600 on March 9, long BTC holders saw their positions evaporate.
Longs started disappearing with BTC in three weeks
Despite the consensus forming around Bitcoin retesting $20,000, small changes in price are still taking a toll on traders.
According to data from monitoring source Coinglass, March 8 saw only $24.4 million BTC longs liquidated, the highest tally in almost a week.
This coincides with BTC/USD’s three-week high, leaving $22,000 as support. At the time of writing, the downtrend continues, while liquidation for the day remains negligible.
Including altcoins, March 8 liquidated $95 million longs and another $15.4 million shorts. More data from on-chain analytics company Glassnode captures long and short liquidation dominance.
Commenting on the action, Filbfilb, founder of the Decentrader trading suite, said it was no surprise that overexposed long positions felt the heat.
“Make to eliminate the majority of longing for the direction of the price,” part of the comments on Twitter stated.
The attached chart shows the liquidation of leveraged positions.
Research warns of “liquidity crisis”
As Cointelegraph reported, Bitcoin price action remains relatively flat despite liquidation behavior.
Related: BTC may need to drop to $19.3K to make Bitcoin profitable – new data
February was the most volatile month on record in terms of opening and closing prices in monthly timeframes.
For The Kobeissi Letter’s source of financial commentary, however, this is a danger in itself – and not just for Bitcoin.
Analyzing the price behavior after the substantial liquidation event on March 3, Kobeissi forecast a widespread “liquidity crisis” in macro assets.
“The net liquidation in the crypto market exceeded $ 200 million in 1 hour. Since then, Bitcoin has traded completely flat and liquidity has disappeared. Imagine what will happen to the broader market if liquidity dries up,” he wrote.
The crisis was also described as “the biggest risk for the market today.”
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