Many leveraged positions appear to be in jeopardy due to Bitcoin's recent price rally, which has formed new liquidation levels along the way. As the crypto asset continues to demonstrate potential for upward movement, investors are advised to proceed cautiously and reassess their positions to avoid substantial losses.
A New Liquidation Level Emerges For Bitcoin Investors
Bitcoin's current price momentum has established new records, not just in price but also in liquidation levels. Following its leg up to a new all-time high, the crypto asset's liquidity levels have risen to a new height of over $90,000, as reported by Alphractal, an advanced investment and data analysis platform in its recent research.
This development represents a fast-growing market sentiment, putting several leveraged positions at risk due to Bitcoin's increasing value. It also underscores the high trader interest and increased market optimism as they adjust to the risk factor presented by Bitcoin's upside strength.
While Bitcoin has created a new liquidation level above $90,000, the investment platform pointed out that the $91,500 price level is expected to put even more pressure on traders with short positions, suggesting possible eradication of the positions.
Alphractal also noted that during the period, BTC’s Open Interest (OI) has been constantly improving, reaching record highs and surpassing the $46 billion mark. Specifically, this persistent rise in open interest demonstrates the growing demand for open future positions.
Drawing attention to the monthly Open Interest Delta metric, the platform highlighted that there has been a sharp increase in positions by crypto exchanges such as Chicago Mercantile Exchange (CME), Binance, the largest crypto platform, and Bitget, indicating there may be high volatility movements ahead, which could more intensively market pressure.
BTC Leverage On The Rise Amid Price Momentum
Despite the potential increased pressure at $91,500, Alphractal revealed that Bitcoin is once again seeing a surge in leverage positions, which implies that traders are increasing their risk exposure as they prepare for significant price changes.
According to the platform, the difference in price between Perpetual and Spot on the crypto exchange, Binance, is drawing much closer to an average of $80. In the past, the market has witnessed notable volatility and forced liquidations whenever the perpetual price massively surpasses that of Spot.
Although the rise in leverage positions may reflect renewed confidence in the market, it could also trigger worries about a possible volatile period. As a result, Alphractal has stressed the importance of cautiously utilizing leverage in order to prevent great losses in the near term.
At the time of writing, BTC was displaying a healthy performance positioned at the $89,940 level, indicating a 3% increase in the last 24 hours. Its market cap has risen by 3% in the past day, while its trading volume is down by about 1.85%.
Featured image from Unsplash, chart from Tradingview.com
