The surge in Bitcoin prices amidst market volatility and speculative prospects has triggered a significant amount of futures liquidations.
The cryptocurrency market has experienced significant volatility, with Bitcoin soaring above $89,500, followed by a slight pullback to around $87,000. This volatility not only expanded BTC's seven-day gains to over 32% but also triggered a wave of futures liquidations totaling nearly $700 million. This surge and subsequent decline mark one of the highest liquidation events since BTC briefly surpassed its previous high of $73,000 earlier this year.
The rapid price fluctuations have severely impacted futures trading, with over $380 million in bearish trades and about $290 million in bullish positions being liquidated. Notably, research from Coinglass indicates that futures tracked solely by BTC accounted for over $200 million in short liquidations, with the Ethereum market also being further affected.
During the turbulent trading period for Bitcoin, major altcoins, including Dogecoin, (SOL), and (APT), also experienced similar setbacks, each reporting futures losses exceeding $25 million. This trend indicates that as traders bet on sudden market changes, the risks of speculative trading are rising—typically, futures liquidations under stable conditions remain below $5 million.
Following these market changes, the annualized financing rate for altcoins tracking futures soared above 30%, indicating traders' eagerness to profit from market trends. Encouragingly, driven by optimism from recent political developments in the U.S., Bitcoin has risen over 7% in the past 24 hours.
Bank analysts suggest that a significant victory for the Republican Party in the upcoming elections could boost the total market cap of cryptocurrencies from the current $3 trillion to $10 trillion by 2026, with a price target of $100,000 for Bitcoin by the end of this year. However, traders are cautious, indicating that a pullback may occur in the short term due to the risk of leveraged liquidation, especially if prices test the $90,000 resistance level.
In summary, the recent fluctuations in Bitcoin prices and their impact on futures trading indicate that the cryptocurrency market is dynamic and often unpredictable. As traders experience these drastic changes, understanding potential factors and maintaining a cautious attitude are crucial for capitalizing on future opportunities. The market still has growth potential, but the risks posed by rapid price fluctuations should not be overlooked.
From the current trend, it doesn't seem suitable to position for spot trading in the short term, as the cost-performance ratio is not very high: hold two-thirds of the position in spot bought at the bottom of the large cycle, waiting for an opportunity to buy again during a pullback.
