Key Points
- Bitcoin’s recent volatility resulted in the liquidation of $310 million in futures positions.
- The dramatic price swing also led to a significant decrease in Open Interest (OI) for Bitcoin.
Bitcoin [BTC] experienced a tumultuous 24 hours, soaring to a new all-time high (ATH) before a swift correction halted its ascent.
The leading cryptocurrency surged to $69.3k during the morning hours of 5th March in the U.S., only to tumble to as low as $61k by the afternoon, as per CoinMarketCap. It managed to recover slightly to $66k, reducing its 24-hour drop to 1.19%.
Impact on Bitcoin Futures
This erratic trajectory led to the liquidation of $310 million in Bitcoin futures positions over the past day. Data from Coinglass, analyzed by AMBCrypto, revealed that around 70% of the liquidated positions were longs.
The ATH surge also resulted in a significant decline in Open Interest (OI) for Bitcoin. Santiment reported that approximately $1.46 billion in OI was wiped out in the hours following the peak, amounting to a 12% drop.
Future Outlook
The drop in OI was ascribed to liquidations of longs aiming for $70k, deliberate closures by longs anticipating the ATH, and liquidations of shorts betting against the ATH.
Santiment expressed optimism about these developments, suggesting that the derivatives market’s influence on Bitcoin’s price might diminish, paving the way for more organic growth in the future.
Despite the volatility, longs continue to dominate on Binance according to the exchange’s funding rate. A substantial number of limit orders are still positioned at $70k, making the next bounce towards this level noteworthy.
The price correction reduced the network’s profitability to 97%, after reaching 100% just a day earlier. The 30-day MVRV Ratio, representing the average unrealized profits, fell to 15.13%.
Technical analyst Ali Martinez had previously cautioned about the bearish implications of the MVRV crossing the 18% threshold. He had forecasted that each time it crossed this threshold, the BTC price could drop by 24% to 55%. This prediction seems to have come true, although Bitcoin bulls will be hoping for a less substantial impact this time.
