A recent 10% surge in Bitcoin's price towards $120,000 could trigger up to $18 billion in short position liquidations, posing risks for the entire cryptocurrency market.
Risks for Short Positions
If Bitcoin reaches $125,000, this would result in the liquidation of $18 billion in short positions. Analysts warn of the potential for a historic liquidation event amid rising trading volumes.
Impact on Other Cryptocurrencies
Given the pressure among short sellers, there may be increased institutional interest and ETF inflows. This could negatively affect other cryptocurrencies, such as Ethereum and altcoins.
Historical Liquidation Examples
Previous Bitcoin milestones, including surpassing the $20K, $40K, and $69K marks, also resulted in massive liquidations. The current situation highlights the largest recorded liquidation cluster in cryptocurrency history.
The increased volatility in the cryptocurrency market, including Bitcoin and other assets, raises concerns among analysts. A sudden rise in Bitcoin could trigger massive liquidations and affect overall market stability.
