Bitcoin (BTC) Is at a Crossroads Between $80,000 and $85,000. Liquidity Is Building Up on the Short Side

Bitcoin (BTC) is at a crossroads between $80,000 and $85,000. It appears liquidity is building up on the short side, potentially inviting liquidations.

Bitcoin (BTC) appears to be at a crossroads, broadly speaking. After a period of sideways trading, it seems that liquidity is building up on the short side, potentially inviting liquidations.

Bitcoin is still in a decisive position, which may affect the newly built leveraged positions. BTC is still undecided on its direction, with the potential to crash again under $80,000 or attempt a recovery above $85,000.

BTC traded at $82,302.53 by 09:03 UTC, having bounced from lows around $81,000. The leading coin is still trading under fearful conditions, with traders expecting more downside. Despite this, traders have taken risks with short positions, expecting higher returns as BTC remains under pressure.

Previously, BTC accumulated short positions around March 7, which suggested a hike to $94,000. The rapid shifting of positions may increase volatility and start another period of sideways trading with both long and short liquidations in a smaller range.

BTC short liquidations may lead to a new rally

As seen in the chart above, BTC has actually built more liquidity on the short side. If BTC breaks above $85,000, liquidations may reach over $16B.

A drop to the $80,000 range can liquidate up to $5B in leveraged long positions. BTC open interest still hovers around $24B, as the market has deleveraged from its peak. However, trading may turn choppy as traders compete for positions within a few thousand dollars of each other.

As a result, BTC mostly trades sideways, bound in a range with regular daily liquidations. Traders are becoming more brave in placing short positions, not expecting enough momentum for a short squeeze. Some of the more experienced traders hold their short positions enough to lock in gains, abandoning the trade before liquidations happen.

The trend for shorting BTC even led to one of the biggest short positions on Hyperliquid, which was not liquidated despite organized counter-trading. The whale, however, was strategic and did not hold the position after locking enough gains. Strategic trading may mean BTC short positions will not be so easy to liquidate, as traders anticipate the attempts.

BTC liquidations are slowing down

BTC liquidations are slowing down, as the market sheds leverage. Long liquidations still dominate, as BTC regularly moves down to lower ranges. There are much fewer whales and market participants that can bid up BTC to attack short positions.

In the past day, BTC liquidations reached $57.37M, while the entire crypto market saw more than $212M in total liquidations. Of those liquidated positions, more than $157M were held in long positions. The trend to liquidate long positions first may be the defining factor for BTC price moves.

BTC currently trades with the expectation of a more decisive signal from the Fed FOMC meeting. A rate hike may turn the mood even more bearish, while a lowered interest rate may spark another BTC rally.

Even without news, traders are still highly active and manage to sweep leveraged positions within a tight range between $81,000 and $82,000. Traders are not making big bets, but aim for small, relatively predictable shifts in the price.

BTC has already completed a 30% drawdown from its highs, and trades with decreased sentiment and available liquidity. Despite the increased stablecoin supply, the lack of direction makes traders extremely cautious to commit. Any decisive news, however, can lead to more rapid trading moves, liquidating traders before they can abandon their positions.

In the meantime, high leverage allows traders to make big gains with relatively small collateral while waiting for a more decisive BTC price move. The leveraged trading also leads to retail capitulation, while long-term whales keep taking coins off the market.