$1.25 billion was liquidated as Bitcoin prices hit a new peak above $118,000.

The Bitcoin derivatives market has just reached a new record as BTC prices continue to grow, surpassing the threshold of 118,000 USD. At the same time, the open contract (OI) of Bitcoin also reached an all-time high, resulting in over 1.25 billion USD being liquidated in just 24 hours.

This increase reflects stronger participation from traders. However, it also raises questions about the sustainability of the current trend, especially as warnings about liquidation of Long positions become more frequent.

BTC price chart | Source: TradingView## Over 1.25 billion USD liquidated, mostly from Short positions

Data from CoinGlass shows that the total amount liquidated in the past 24 hours has exceeded 1.25 billion USD, of which up to 1.1 billion USD came from Short positions. Specifically, Bitcoin has recorded more than 658.7 million USD in liquidation.

Source: CoinglassThis indicates that many traders have bet on a market correction as Bitcoin surpassed the 112,000 USD mark, but that correction did not occur as they expected.

A typical example is James Wynn, a famous trader on the Hyperliquid platform. According to a report from Lookonchain, Wynn's Short BTC position was completely liquidated in less than 12 hours, causing him to incur a loss of 27,921.63 USD.

According to Byzantine General, an advisor at Velo, data from exchanges shows that this could be one of the largest Short liquidations in many years.

Liquidation risk continues to rise as OI hits new record

The market may witness more powerful liquidation waves in the coming days. OI, the index reflecting the total value of futures contracts, reached a new peak last July, indicating strong participation from traders.

The total OI across the cryptocurrency market has now exceeded 177 billion USD, the highest level ever. Specifically, the OI of Bitcoin has reached 78.6 billion USD, establishing another record milestone. This demonstrates that traders are currently very focused on the market and are inclined to increase leverage in their trades.

OI of the market and Bitcoin | Source: CoinglassWith the current peak level, the market is undergoing a highly sensitive phase. When OI reaches high, it means that many traders are using large leverage to participate. Even a small price fluctuation of Bitcoin can lead to significant losses, creating a strong liquidation effect, causing the market to easily fall into an unstable state.

This can trigger an automatic liquidation chain, when contracts are forced to close due to insufficient margin requirements. This situation further increases tension and risk in the market, especially in the context where traders are using excessive leverage in a highly volatile environment like the current one.

Trader psychology shifts from Short to Long

The current market sentiment is undergoing a significant change. As the price of Bitcoin continues to grow, traders seem to have abandoned their Short positions and shifted to Long, hoping that the upward momentum will persist.

The liquidation chart from Coinglass shows a significant change in trading behavior. The amount of Long liquidation (red) on major exchanges has now far exceeded Short liquidation (blue). This indicates that more and more traders are confident in the bullish trend of Bitcoin and have turned to Long instead of continuing to Short.

Famous analyst Joe Consorti has issued a warning about this change:

"The liquidation leverage for Long is currently dominating the Short leverage with a ratio of 10:1. Be careful!"

This warning emphasizes that although the price increase of Bitcoin may persuade traders to change their expectations, using high leverage to enter Long positions can entail potential risks.

This shift reflects a significant optimism in the trading community, as investors are anticipating a prolonged bullish cycle for Bitcoin and altcoins. However, it is important to recognize that any unexpected news event or sudden volatility can lead to substantial losses, especially in a market where traders are using high leverage.

Therefore, although the current trend may offer attractive profits, traders need to be cautious and assess risks thoroughly to avoid being caught up in unforeseen fluctuations.

Annie