- About $310 million worth of Bitcoin futures positions were liquidated in the last 24 hours.
- Bitcoin’s OI fell 12% after the peak.
In a dramatic turn of events over the past 24 hours, Bitcoin [BTC] made a historic climb to its new all-time high (ATH), before a sharp correction left the game short.
After rising to $69.3k during the US morning hours on March 5, the king coin reversed and fell to $61k by the afternoon, according to CoinMarketCap. The crypto regained some strength to $66k at the time of writing, narrowing its 24-hour decline to 1.19%.
Derivatives market is being overhauled
The rollercoaster ride led to the liquidation of $310 million in Bitcoin futures positions in the past 24 hours, according to AMBCrypto’s examination of Coinglass data. About 70% of the liquidated positions belonged to longs.
Source: Coinglass
Furthermore, the climb to ATH caused a significant drop in Open Interest (OI) for Bitcoin. According to SantimentIn the hours after the peak, approximately $1.46 billion in OI was wiped out, marking a 12% decline.
The drop in OI was attributed to the liquidations of longs targeting $70,000, the intentional closing by longs anticipating ATH, and the liquidations of shorts betting against the ATH.
Source: Coinglass
Positive signals?
Santiment viewed this development with optimism, hoping that the derivatives market’s influence on Bitcoin’s price would diminish, allowing for greater organic growth in the future.
That said, longs were still dominant on Binance at the time of writing, according to the exchange’s funding rate. A large number of limit orders continued to be placed at $70,000. Therefore, the next jump towards this level would be worth watching.
More damage could follow
The retracement saw the network’s profitability drop to 97% after rising to 100% a day earlier. The 30-day MVRV ratio, or average unrealized profit, fell to 15.13% at the time of writing.
Source: Santiment
Read BTC price forecast for 2024-2025
Interestingly, noted technical analyst Ali Martinez had warned of the bearish implications of the MVRV crossing 18% shortly before Tuesday’s dramatic moves.
Martinez had predicted,
“Since February 2021, every time it crossed the 18% threshold, BTC price fell by 24% to 55%.”
Although the prophecy came true, Bitcoin bulls are hoping that the damage will not be as severe as previous cases.