Binance Long Positions Face 'Liquidation Wave' as Bitcoin Targets August Depths
Analysis from CryptoQuant highlights increasing pressure on leveraged long positions as Bitcoin futures open interest on Binance declined in tandem with BTC's falling price.
Leveraged Bitcoin (BTC) long positions are "facing liquidation" as market volatility signals that a potential range breakout may finally be approaching.
Key points:
- Analyst cautions that Bitcoin long positions are under multiple threats as BTC price action moves toward fresh August lows.
- On Thursday, the correlation between Binance open interest and price hit 0.25 as both experienced declines.
- CryptoQuant CEO Ki Young Ju states that the Bitcoin bull market isn't prepared to stage a return.
Price decline puts pressure on Bitcoin long positions
Analysis shared on the onchain analytics platform CryptoQuant by community contributor "BorisD" on Thursday indicates that leveraged long BTC positions are experiencing a flush-out as BTC/USD approaches month-to-date lows.
The examination centers on the connection between price action and open interest (OI) on Binance. OI signifies the total number of active derivative positions, encompassing both long and short contracts, and demonstrates capital allocation in a particular market.
Although price has remained within a tight range since June, data from CryptoQuant reveals that Binance OI has steadily climbed, hitting $8.15 billion on Wednesday as futures markets increasingly dominate while spot market participants remain on the sidelines.
As price now experiences downside volatility across lower time frames, the relationship between price and OI has transitioned into a state of flux, potentially creating pressure on long positions that accumulated in the low $60,000 range.
"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."
The most recent correlation data displayed a reading of 0.25, a figure that the analyst indicated reflects diminishing long positions as price continues its descent, 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.
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.
"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.
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.