Important points:
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The significant drop in total open interest highlights the severity of the $20 billion leveraged liquidation and highlights traders’ reluctance to re-enter the market.
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The Bitcoin sell-off and price decline is likely to continue until the CME BTC market and stock futures market open on Sunday night US time.
Cryptocurrency markets continue to reel from Friday’s historic decline, which resulted in more than $20 billion in centralized exchange liquidations and hundreds of millions of dollars across DeFi.
Traders were clearly caught off guard as President Trump’s 100% tariffs on Chinese imports sent shockwaves through the crypto market. Data from CoinGlass shows the severity of the flash crash, with Bitcoin (BTC) struggling to rise above $110,000 at the time of writing, while other major currencies such as Ether (ETH) and SOL (SOL) are down 3.74% and 7.0%, respectively.
President Trump’s well-timed tweet on Friday came in the final two hours of the trading day for stocks and regulated cryptocurrency exchanges, potentially widening the downside in prices as CeFi and CEX volume and order book decline over the weekend.
In a conversation with Schwab Network anchor Nicole Petalides, Cointelegraph’s head of markets, Ray Salmond, explained how Bitcoin, Ether, and several altcoins are ripe for exploitation, according to liquidation heatmap data.
“If you look at Hyblock Capital’s liquidation heatmap data, which basically shows where all the short and long positions are in the various order books of centralized crypto exchanges, you can see that there are pockets of liquidity for long positions that are being exploited… those pockets are spread from $120,000 to $115,000, and from $115,000 to $113,000.”
Salmond added:
“There are a number of indicators and data that suggest that Bitcoin is currently trading at a discount. If we consider the average price to be $120,000, one standard deviation away from it would be $115,000, and two standard deviations away from the average would be $115,000. Aggregated Bitcoin order book data shows that there is a good amount of bidding within that range at this time.”
Related: Bitcoin could be “dragged a bit” due to President Trump’s tariff concerns: executives
With Bitcoin currently struggling to trade above $110,000, the liquidation heatmap shows leveraged long positions at $98,600, and BTC open interest highlights the current reluctance of traders to open new positions, at least in the perpetual futures market.
As shown in the graph below, global open interest for all cryptocurrencies (except BTC and ETH) also decreased, with OI decreasing by nearly 45% on most exchanges.
As Bitcoin and the broader market continue to show weakness over the weekend, the most likely outcome is a continued soft sell-off until the Bitcoin CME futures market and stock futures market open on Sunday night. The nature of futures opens may provide traders with insight into how TradFi “feels” about the current situation.
The increase or normalization of global open interest in the crypto market, and whether the trend remains down, stabilizes, or turns up during this process, will also foretell the new direction the market may choose.
X user EndGame Macro provided one of the best contextual overviews of what was going on in the background before the chaos we’re seeing in the crypto markets.
This article does not contain investment advice or recommendations. All investment and trading moves involve risk and readers should conduct their own research when making decisions.