Despite $845M in Liquidations, Bitcoin (BTC) Price Approaches Its All-Time High of $110,000

With Bitcoin (BTC) price approaching its all-time high of $110,000, the choppy price action has liquidated $845 million in just two days.

Bitcoin (BTC) price has been churning choppily as the cryptocurrency approaches its all-time high of $110,000. In the past two days alone, $845 million in crypto futures got liquidated.

However, despite this culling, Open Interest (OI) on futures remained elevated at 199.72k BTC. Moreover, an analysis of institutional activity and crypto ETF outflows shows that investors remain optimistic about BTC’s future.

Here’s a breakdown:

BTC Price Pushes Toward ATH As $845 Million Gets Liquidated

The May 18 and 19 price action saw BTC price climb to $106.6k, drop to $102k, and revisit a four-month high of $107.1k. As a result of this rapid price change, the cryptocurrency market witnessed a liquidation of $845 million, according to CoinGlass data.

Most of the liquidations occurred on Binance, with $604.47 million in crypto futures getting liquidated on the exchange. In comparison, OKX saw $106.35 million in liquidations, and Bybit saw $94.34 million.

CoinGlass notes that the OI growth relative to Bitcoin’s price since Q2 highlights how bullish traders are. At the start of Q2, the cryptocurrency’s price was around $90k, and OI was at 100k BTC. Now, as BTC approaches $110k, OI has nearly doubled to 199.72k BTC.

Another driver of Bitcoin’s recent push to $107k is the “unexpectedly bullish turn in US trade diplomacy,” adds trading firm QCP Capital.

Providing their insight into crypto’s short-term future, QCP Capital noted that the rebound in cryptos has “outpaced equities, with BTC edging close to all-time highs.”

The trading firm adds, “there is further room for digital assets to rally,” and attributes Coinbase’s inclusion into the S&P 500 on May 19 as a catalyst.

“History tells us that index inclusion tends to act as a short-term catalyst, as passive managers adjust their allocations to track the benchmark more closely.”

Finally, filings with the U.S. Securities and Exchange Commission (SEC) last week showed that MetaPlanet and MicroStrategy (NASDAQ:MSTR) accumulated 1,004 and 7,390 BTCs, respectively. This is another interesting development that could help push Bitcoin price higher.

May also saw a record inflow of 3.3 billion into crypto spot ETFs, surpassing April’s 2.97 billion netflow and continuing the strong start to the year.

Bitcoin Price Forecast: Technical Analysis

The fundamentals and on-chain metrics are clearly bullish and forecast a sustained growth for Bitcoin. However, the technicals provide a much more nuanced outlook – futures and options data show that the short-term outlook is treacherous with the possibility of an ATH retest and a potential crash.

Bitcoin’s aggregated Implied Volatility (IV) index is at a 10-month low, warning traders to be cautious. This metric averages IVs across multiple timeframes for BTC and evaluates deviations from the mean to determine overextended moves. A high deviation signals expectations are skewed and often leads to price reversals. The data is calculated using Volmex’s Implied Volatility Indices.

The divergence between dropping IV and rallying Bitcoin price signals heightened uncertainty. In BTC’s case, it could be due to potential profit-taking, resistance levels, or fear of corrections.

Supporting this slightly bearish outlook for Bitcoin price is the Relative Strength Index (RSI) hovering in the overbought zone. Interestingly, RSI has produced lower highs since May 10 while BTC has been setting up higher highs. This non-conformity is known as bearish divergence and often signals an impending pullback.

While a short-term spike in buying pressure could push Bitcoin price to ATH or even set up a new one at $110,000, it is unlikely that it will sustain there due to the aforementioned warning signals.

Highlighting this short-term uncertainty are CME Open Interest and Annualized Basis, both of which are flat. This outlook suggests that more sophisticated investors do not believe in a sustained breakout of the ATH.

Hence, investors are advised to exercise caution in the short term as Bitcoin’s price could hit a new ATH and still trigger a brutal sell-off.

Investors are advised to heed the technical analysis signals in the short term as they could determine the immediate price trend.