Bitcoin Liquidation Wave Continues Despite $4.6B Influx

"Inverse Jim Cramer" Thinks Bitcoin's Topping Out - Time To BUY?
Classic Bitcoin bullish pattern returns

YEREVAN (CoinChapter.com) – Bitcoin (BTC) price fell to $45,900 on Jan 12, after a 6% slide since the short-lived spike on Jan 11. Besides the euphoria, the spot ETF approval lo caused a wave of Bitcoin liquidations on the futures market as a result of the price drawdown.

Bitcoin liquidations
BTC/USD on Jan 12. Source: CoinStats

Bitcoin Liquidations Drop the BTC Price

Bitcoin’s Wall Street debut resulted in around $83 million in liquidations. This occurred as Bitcoin ETFs saw about $4.6 billion in volumes on their first day, exceeding predictions. But market volatility hit futures speculators hard as prices fluctuated wildly.

Did You Know? In the cryptocurrency market, price volatility and liquidations are closely connected due to the use of leverage. When traders use leverage, they borrow funds to increase their trading position, amplifying both potential gains and losses. If the price of Bitcoin moves sharply in the opposite direction to their bet, the value of the position can quickly fall below the required maintenance margin.

When this happens, the position is automatically closed, or “liquidated,” to prevent further losses. This creates a cascading effect as each liquidation can push the price further, triggering more liquidations in a feedback loop.

Will BTC/USD reach $50K?

According to data from on-chain tracker Coinglass, the liquidation wave began on Jan 10 as a result of significant volatility. Bitcoin price rose to nearly $48,000 before falling back into the $45,000 range within a 24-hour period.

This price fluctuation resulted in $230 million in leveraged crypto positions being liquidated on centralized exchanges. The majority of these liquidations were long positions, totaling $140 million, while short positions accounted for $91 million in liquidations.

A false message about the approval of a spot Bitcoin ETF due to a security breach of the SEC’s official account possibly triggered the volatility.

However, given the magnitude of the fund influx after the first day of trading, Bitcoin price could see a boost in the coming sessions. If the bullish prediction is correct, the target price for BTC would stand at a previous resistance of $52,000 by the week’s end, or another 13% higher than the current value.

Bitcoin liquidations
Bitcoin (BTC) price slide. Source: TradingView

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