Bitcoin long liquidations surge after pullback, $80,000 foothold faces test

Bitcoin pulled back to $78,000 after breaking above $80,000, triggering $324.4 million in forced liquidations in the crypto market in a day.

On Aug. 26, blockchain outlet CryptoSlate reported that most of the liquidations came from long positions, reversing last week’s pattern in which short liquidations amplified a rally.

CoinGlass data showed about 80,000 liquidations over the past 24 hours. Of total losses, about $270 million came from long positions, and on Binance a $11.91 million bitcoin position was the largest single liquidation. By asset, bitcoin long liquidations were about $109 million and ethereum long liquidations were about $70 million. XRP and Zcash (ZEC) long liquidations totaled about $16 million and $11 million, respectively.

Market attention is focused less on the size of the liquidations than on the change in positioning. When bitcoin broke above the top of its range last week, investors betting on a decline were liquidated in large numbers. Market maker Wintermute analyzed that about 92 percent of total liquidations were short positions. Inflows of $2.6 billion into crypto investment products also widened the gains.

More recently, leverage has been rebuilding quickly, centered on long positions. As exchange-traded fund (ETF) inflows stabilized and bitcoin held the bottom of its range, investors shifted to a bullish stance, but Wintermute warned that the pace of the position shift is similar to the squeeze period. That means that after the upside momentum from short covering is exhausted, additional price gains need to be supported by real buying interest that flows in at higher prices as well.