While investor positions in Bitcoin (BTC) using borrowed funds on the cryptocurrency market are under close watch, Alphractal CEO Joao Wedson has drawn attention to the growing risk of liquidation, particularly in long positions. According to Wedson, data from the past six months shows that long positions are accumulating faster than short positions on the Bitcoin market, and the concentration of liquidity to the downside is becoming increasingly pronounced.
The analyst stated that under current conditions, the most critical level is around $57,000.
The Largest Liquidity Zone for Bitcoin is in the Range of $56,400 to $58,300.
According to six-month Bitcoin liquidation data provided by Wedson, the largest zone of long position liquidations is concentrated in the range of $56,400 to $58,300.
In this region, some individual liquidation clusters approach $2 billion in size. The largest liquidation level is around $57,300.
In the analyst's opinion, a drop in Bitcoin's price to $57,300 could lead to the liquidation of potential long positions worth approximately $1.93 billion.
There are also billion-dollar liquidation clusters in the price range around $51,000.
The risk of a Bitcoin price decline is not limited to just the $57,000 level.
Wedson noted that there is also a significant long liquidation zone in the range of $51,000 to $51,900. It is claimed that several different liquidation clusters in this region have exceeded $1 billion in size.
This is considered a substantial factor that could increase the likelihood of a chain reaction of leveraged long position liquidations in the event of a sharp Bitcoin price drop.
The Critical Zone for Short Positions is $70,000–$71,200.
In an upward move, the most important short position liquidation zone is the range from $70,000 to $71,200.
According to Wedson's data, in this price range, potential clusters of short liquidations reaching approximately $1 billion at various levels could be observed.
However, the analyst emphasized that the key difference between long and short positions lies in the concentration of liquidation operations, not in their total volume.
Joao Wedson: The $57,000 Level Concerns Me the Most.
Wedson stated that the liquidity for long positions existing below Bitcoin's current price is becoming increasingly concentrated, especially around the $57,000 area.
The analyst noted that this data does not necessarily mean Bitcoin's price will fall to this level, but it is important as it shows where highly leveraged positions are accumulating.
Wedson said that an excessive concentration of leveraged trades on one side of the market can increase the risk of liquidation chains, and that the $57,000 level remains his biggest concern.
If Bitcoin's price approaches the $57,000 level in the near future, the liquidation of large long positions could intensify selling pressure and lead to a more extensive wave of liquidations.
*This is not investment advice.
