$10B in Bitcoin shorts at risk: Is crypto heading into a major liquidation event?

Could this week be the worst crypto liquidation of the cycle?

From a technical perspective, it’s easy to see why longs could be at deeper risk. Despite some relief from the geopolitical tensions, the market is barely responding. According to SoSoValue, the U.S. investors seem to have turned their back on digital assets as ETFs are down big in the week. However, in the background, there is one chart that actually stands out on the bear’s side.

As the chart shows, Bitcoin’s Open Interest has crossed an 8-month peak and climbed to the level seen prior to the October crash. Put simply, leverage is exploding while price is barely moving. Adding to this, a trader recently went live with a 40x short on $BTC, showing just how aggressive the positioning has become.

The key takeaway? The story doesn’t end here.

According to CoinGlass, Bitcoin [$BTC] has nearly twice as much liquidation liquidity above the price than below. Specifically, $10 billion in potential short liquidations compared to $5.6 billion in long liquidation supply. This means that if the $BTC price goes up, a short squeeze is in the works.

That said, the positioning of the market technically makes perfect sense. As mentioned above, the crypto market is having a tough time attracting liquidity, while speculators are clustering around the $60k level. That said, the macro picture could be pointing to something completely different. And that’s exactly why this week could set the stage for one of the biggest crypto liquidation events of the cycle.