Key points:
A significant drop in overall open interest underscores the impact of the $20 billion in leveraged liquidations, reflecting traders’ hesitance to re-enter the market.
Continued Bitcoin selling and price weakness are expected until CME BTC and equity futures markets launch on Sunday evening, US time.
The crypto market is still feeling the aftermath of Friday’s unprecedented sell-off, leading to over $20 billion in liquidations on centralized exchanges and several hundred million in the DeFi sector.
Traders appeared taken aback as President Trump’s announcement of a 100% tariff on Chinese imports reverberated throughout the crypto market. Data from CoinGlass illustrates the extent of the flash-crash; at present, Bitcoin (BTC) finds it challenging to maintain a price above $110,000, while other significant assets like Ether (ETH) and SOL (SOL) have dropped by 3.74% and 7.0%, respectively.
Trump’s tweet, which was well-timed towards the end of the trading day for equities and regulated crypto trading platforms, may lead to prolonged downward pressure as volumes and order books in CeFi and CEXs dwindle over the weekend.
While speaking with Schwab Network anchor Nicole Petallides, Cointelegraph’s markets head Ray Salmond highlighted how Bitcoin, Ether, and several altcoins were vulnerable according to liquidation heatmap data.
“An analysis of the liquidation heatmap data from Hyblock Capital reveals the locations of all short and long positions on various centralized exchanges. There’s a liquidity pocket of long positions being targeted… this spans from $120,000 to $115,000 and from $115,000 down to $113,000.”
Salmond further noted:
“Multiple metrics suggest that Bitcoin is currently undervalued. If we consider the average price to be $120,000, a 1 standard deviation move down is $115,000, and a 2 standard deviation drop brings us to $110,000. Current aggregate order book data for Bitcoin shows a significant volume of bids within that range.”
Related: Bitcoin may face volatility due to Trump tariff concerns: Exec
As Bitcoin struggles to hold above $110,000, the liquidation heatmap indicates a cluster of leveraged long positions at $98,600, while BTC open interest reflects traders’ current hesitance to initiate new positions, particularly in the perpetual futures market.
As demonstrated in the following chart, global open interest across all cryptocurrencies (excluding BTC and ETH) has also taken a significant hit, with most exchanges reporting nearly a 45% decline in open interest.
With both Bitcoin and the broader market continuing to exhibit weakness over the weekend, extended soft selling appears likely until the CME futures markets for Bitcoin and equities open on Sunday evening. The nature of the futures open could offer insights into how traditional finance perceives the current climate.
An increase or stabilization in global open interest within crypto markets, and whether the trend remains downward, stabilizes, or begins to rise during this time will be indicative of the market’s potential next steps.
X user, EndGame Macro offered one of the most insightful contexts regarding the turmoil experienced in crypto markets prior to the upheaval.
This article does not contain investment advice or recommendations. Every investment and trading decision entails risk, and readers should carry out their own research before proceeding.
