Key points:
A sharp reduction in aggregate open interest highlights the severity of the $20 billion in leveraged liquidations and highlights traders’ reluctance to re-enter the market.
Bitcoin selling and price weakness are likely to extend until CME BTC and equities futures markets open on Sunday evening, US hours.
The crypto market continues to reel from Friday’s historic sell-off, which resulted in over $20 billion in centralized exchange liquidations and several hundred million across the DeFi landscape.
Traders were clearly caught off guard as President Trump’s 100% tariff on Chinese imports Truth Social Post sent shockwaves across the crypto market. Data from CoinGlass shows the severity of the flash-crash, and at the time of writing, Bitcoin (BTC) struggles to trade above $110,000, while other majors like Ether (ETH) and SOL (SOL) are down 3.74% and 7.0% respectively.
Trump’s aptly timed tweet on Friday happened in the last 2 hours of the trading day for equities and regulated crypto trading venues, so there is a chance for extended price downside as volumes and orderbooks in CeFi and CEXs thin out over the weekend.
While speaking to Schwab Network anchor Nicole Petallides, Cointelegraph head of markets Ray Salmond explained how Bitcoin, Ether and several altcoins were ripe for exploitation according to liquidation heatmap data.
“If we look at liquidation heatmap data from Hyblock Capital, which basically shows where all the short and long positions are across various orderbooks at centralized crypto exchanges, we can see that there’s a liquidity pocket of long positions that are being exploited…that pocket extends from $120,000 to $115,000 and from $115,000 to $113,000.”
Salmond added:
“There are plenty of metrics and data that suggest Bitcoin is trading at a discount right now. If you consider the mean price to be $120,000, a 1 standard deviation move away from that is $115,000, a 2 standard deviation move away from the mean is $110,000. Aggregate orderbook data for Bitcoin currently shows a sufficiently hefty amount of bids in that range.”
Related: Bitcoin may get ‘dragged around a bit’ amid Trump tariff fears: Exec
Currently, as Bitcoin struggles to trade above $110,000, the liquidation heatmap shows a pocket of leveraged long positions at $98,600, and BTC open interest highlights traders’ current reluctance to open fresh positions, at least in the perpetual future market.
As shown in the chart below, global open interest across all cryptocurrencies (excluding BTC and ETH) also took a beating, with most exchanges seeing a near 45% reduction in OI.
With Bitcoin and the wider market continuing to show weakness during the weekend, the most likely outcome is extended soft selling until CME futures markets for Bitcoin and equities futures open on Sunday evening. The nature of the futures open is likely to provide traders with insight into how TradFi “feels” about the current situation.
An uptick or normalization of global open interest in crypto markets and whether or not the trend remains down, stabilizes, or begins to trend up during this process will also be a tell on the emerging direction the market may choose.
X user, EndGame Macro provided one of the best contextual overviews of what was happening in the background prior to the mayhem seen in crypto markets.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.