Bitcoin (BTC) long positions are “facing liquidation” as volatility shows signs that a range breakout is finally coming.
Key points:
- Bitcoin long positions face multiple threats as BTC price action heads toward new August lows, analyst warns.
- The correlation between Binance open interest and price reached 0.25 on Thursday as both fell.
- The Bitcoin bull market is not ready to make a comeback, CryptoQuant CEO Ki Young Ju says.
Bitcoin longs feel the squeeze as price drops
Insights published on onchain analytics platform CryptoQuant by community analyst “BorisD” on Thursday suggest that leveraged long BTC positions are being flushed out as BTC/USD targets month-to-date lows.
BTC/USD one-hour chart. Source: Cointelegraph/TradingView
The analysis focuses on the relationship between price and open interest (OI) on Binance. OI represents total active derivative positions, both long and short, and reflects capital commitment in a given market.
While price has traded in a narrow range since June, CryptoQuant data show that Binance OI has gradually increased, reaching $8.15 billion on Wednesday as futures increasingly steer the market while spot traders sit on the sidelines.
Bitcoin open interest on Binance. Source: CryptoQuant
With price now seeing downside volatility on lower time frames, the correlation between price and OI has entered a state of flux, potentially squeezing long positions that have built up in the low $60,000 zone.
“In the Bitcoin market, the Binance Open Interest (OI) Correlation and liquidation warning signals clearly reveal the process of leveraged positions being flushed out. Initially, as the price fell, the correlation shifted to the negative side, indicating that OI was rising despite declining prices,” the analyst wrote.
“This showed a double-sided squeeze and [an] increasingly complex liquidity structure — driven by long positions trying to buy the dip on one end, and additional short positions entering the market on the other.”
BTC/USD vs. Binance OI data. Source: CryptoQuant
The latest correlation data showed a reading of 0.25, a number that the analyst said reflects declining long positions as price continues to fall, suggesting the “anticipated cleanout has begun.”
“The simultaneous drop in both price and OI indicates that leveraged long positions are giving up, getting stopped out, or facing liquidation,” the analyst continued.
Data from CoinGlass put total 24-hour cross-crypto liquidations at $236 million at the time of writing.
Crypto liquidation history (screenshot). Source: CoinGlass
CryptoQuant CEO: “Stars haven’t aligned” for Bitcoin bull market
In his latest market commentary, CryptoQuant CEO Ki Young Ju said conditions for a renewed Bitcoin bull market have yet to emerge.
Related: Bitcoin speculators keep BTC price ‘pinned’ below $68.7K: Glassnode
“The stars haven’t aligned for a Bitcoin bull run just yet,” he wrote on X alongside a basket of onchain indicators still in “bear” territory.
Bitcoin onchain indicator heatmap. Source: Ki Young Ju on X.com
Cointelegraph has previously reported on several composite onchain indicators reaching similar conclusions about the current stage of the BTC price cycle. One of them, from onchain analytics platform Glassnode, is currently in its longest “capitulation” phase since the end of Bitcoin’s last bear market in 2022.