Within the realm of Bitcoin futures, there has been an interesting downturn of events. Liquidations have hit the lowest level since April, based on Coinglass data which registered just under $9 million worth of Bitcoin futures liquidations. Consequently, these numbers make up a large part of the total $28 million liquidations from all cryptos.
So, what’s the crux here? Liquidations are decisive moments of exchange-induced closure in traders’ leveraged positions. Such forced cessation comes into play when a trader falls short on the margin requirements for that leveraged position, or they don’t have the finances to keep their trade open.
These significant liquidations are quite indicative in a way, as they enable traders to deduce the upper or lower reaches of a price movement, thereby enabling them to make strategic moves. Besides, a downward shift in futures trading volumes was noticed, showing a marked 21% drop in contrast to Monday.
Simultaneously though, there was a slight upward tick of 1.16% in ‘Open Interest’, illustrating the count of unsettled contracts. This implies that though more positions are being opened by traders, they are playing safer by using considerably lesser leverage. Is this a sign of a risk-averse sentiment seeping into traders’ minds? Maybe.
In parallel, FxPro senior market analyst Alex Kuptsikevich sees the potential in Bitcoin for sideways action in the foreseeable months. This assertion further insinuates the likelihood of lower than usual future trading volumes.
Kuptsikevich further states that we, as a market, are currently in a stage of ‘reaccumulation’. Such phases are common precursors to a halving event, as noted by Glassnode. Thus, it’s not out of the question to expect a fair bit of sideways trading in the coming months.
However, there is a glimmer of positivity too. Only if Bitcoin breaks above the short-term range’s upper threshold of $31.4K, can the market anticipate further gains with potential targets nearing $35.5K by month-end.
Thus, the takeaway here is that there is indeed risk aversion setting in, as traders are looking for steady growth and choosing lesser leverage. This is a clear manifestation of the swings and roundabouts nature of the market. It will be intriguing to watch how the Bitcoin futures market continues to evolve.
Source: Coindesk
