Bitcoin remains in a tight spot as its next directional move carries significant liquidation consequences on both sides of the market.
Selling pressure is increasing, macroeconomic uncertainty is increasing and investors are increasingly shifting towards protecting their capital over the longer term.
There are $22.08 billion in liquidation clusters on both sides
The latest analysis from the CEO of Alpharactal shows that Bitcoin [BTC] has amassed large liquidation clusters on both the buy and sell sides over the past three months, worth $22.08 billion, depending on where the price skews.
The analysis shows that a lower decline, where the asset falls to between $69,990 and $62,153, carries the most risk as it would trigger a long liquidation cascade of $12.73 billion from the market.
On the other hand, an upside rally carries minimal short liquidation risk in comparison.
Between $83,109 and $84,131, the capital expected to leave the market via short liquidations is $9.35 billion. Currently, market momentum will determine which side is likely to bear the brunt of these losses first, depending on where prices skew.
Coinbase Premium Index remains negative
A significant sell-off by US investors is already weighing on Bitcoin’s short-term prospects and raising the risk of a liquidation cascade against long positions.
The Coinbase Premium Index, which measures whether US investors are paying a premium or discount on Bitcoin, has remained consistently negative, indicating that selling pressure from this cohort has been dominant.
American Spot Bitcoin Exchange Mains Power facts confirms this, showing that US investors sold a total of $1.34 billion worth of Bitcoin over four consecutive trading days.
Notably, this sale has had a measurable impact on price. Bitcoin fell from $79,146 on May 15, when the sell-off began, to $77,667 at the end of the last trading session on May 20.
The broader Spot market has followed this trend, with CoinGlass Spot netflow reaching $103.26 million on the sell side between May 20 and 21.
10-year US Treasury yields hit 20-year highs
Macroeconomic factors have strongly influenced investors’ decision to exit the market in recent days.
One of the key macro factors stems from the fact that rising US 10-year yields have reached a 20-year high, signaling inflation risk and tightening liquidity conditions, a dynamic that has also occurred in major economies including Japan.
US 10-year Treasury yields have reached 4.68%, meaning investors are pricing in the risk of a further decline.
If the price continues to rise, the trend towards more downside risk for Bitcoin will grow, especially given the size of US investors’ exposure to the asset.
Final summary
- A drop to between $69,990 and $62,153 would lead to $12.73 billion in long liquidations, while a rally between $83,109 and $84,131 would leave short liquidation risk of $9.35 billion.
- The US Spot Bitcoin exchanges’ net flows show outflows of $1.34 billion over four consecutive trading days, with the Coinbase Premium Index remaining negative the entire time.