Huge Clearance Is Coming! Bulls vs Bears: Who Will Win the $80K Battle?
Technical analysis:
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This chart is one of the most important indicators for understanding market behavior, especially in highly leveraged environments such as cryptocurrencies. Whether you are a day trader, swing trader, or investor, understanding liquidation (both long and short) can give you a unique advantage in predicting price trends.
In this analysis, we will delve into what the total liquidation chart means, how to interpret it, and how it can help you position yourself in the market ahead of major moves. We will cover price predictions, bull/bear scenarios, and how liquidation events shape the future of the market. 🌪️💸
📊 Understanding the Chart: The Filter Triad
This chart shows three key metrics:
Red bars (short liquidation): When traders who bet on falling prices (short liquidation) are forced to close their positions.
Green bars (long liquidation): When traders who bet on rising prices are liquidated (long liquidation).
Yellow line (price): Actual price movement of the asset over time.
Liquidation events (both long and short) result in sharp spikes in liquidity, which can lead to huge volatility. When liquidations accumulate, especially when large long or short positions are wiped out, the market often experiences large price movements.
🔥 The most important notes from the chart:
June-July: Massive liquidation event ($2.469 billion liquidation)
During this period, a massive liquidation occurred as both long and short positions were eliminated. This was coupled with a significant price drop from $60,000 to around $30,000.
Interpretation: This is likely a capitulation event where traders who exceeded their maximum leverage were forced out of the market, paving the way for the price to bottom out.
Late July to early November: Uptrend with major long selloffs:
As the price returned to the $60K-$70K range, we saw a sharp increase in long liquidations during sharp price increases. This indicates that while bulls were in control of the market, many traders entered into overly leveraged long positions, leading to liquidations when the price recorded sharp declines.
Explanation: During bull runs, it is common to see long liquidations when traders over-leverage, especially after FOMO buying at local highs.
December to January: Price collapse with long and large liquidations:
At this point, the price started to collapse from $60,000 to below $40,000, leading to massive long liquidations as bulls got caught on the wrong side of the market.
Interpretation: When a price decline is coupled with heavy long liquidations, this often signals the beginning of a more sustained downtrend. Traders had overextended long positions, which were wiped out as the bears took over.
After January to June: Consolidation with short liquidation:
After reaching a low near $30,000, we entered a price consolidation phase, where short liquidations started to dominate, indicating that bears were over-leveraged, and anticipating further declines.
Interpretation: Short liquidation during a consolidation is usually a bullish sign, as it shows that bears are being squeezed, often leading to a price recovery.
🚀 Price forecasts and future expectations:
Bullish scenario: Road to $80k 🌕💹
Filter pressure and high prices:
As we saw during previous bull runs (July and November), long liquidations provided the liquidity that fueled the higher price action. Going forward, if the price rises sharply from the current consolidation range, it is possible that the over-leveraged shorts will be drained, providing fuel for a return to $60,000 or higher.
Key ascent levels:
$60,000 - $65,000: This range represents the previous high liquidation area. A break above this range will trigger a short squeeze, which could push prices towards $70,000 or higher.
$80,000+ Target: If bulls maintain control, short liquidation could push prices into uncharted territory, potentially reaching $80,000 or more.
Signs to look out for:
Sharp Short Liquidation Spikes: If short liquidation spikes are accompanied by rising prices, this indicates that the bullish breakout is gaining strength.
Bearish scenario: Drop below $30k 📉⚠️
Over-borrowing can lead to ruin:
If the price starts to fall below key support levels (such as $40,000 or $30,000), and long liquidations start to pick up, this indicates that the market has capitulated. This is a classic sign of a market crash.
Key landing levels:
$40k: A very important psychological and technical support level. If broken, we expect a long liquidation wave that could accelerate the price decline.
$30,000 or below: If bulls cannot hold this level, we could see a free fall as long positions are wiped out, causing cascading liquidations.
Signs to look out for:
Long liquidation spikes during a downward price action indicate that bulls are overleveraged and are unloading their positions, which is often followed by further price declines.
⚖️ Long vs Short Liquidation: The Turning Point
Understanding the balance between long and short liquidations is crucial. When one side dominates (either through too many long liquidations or too many short liquidations), it generally means that side of the market is overleveraged and ready to reverse.
Bullish reversals (caused by short liquidation):
When short liquidations increase, it usually indicates that bears are under pressure. This can create a cascading effect where bears are forced to close their positions, adding buying pressure to the market.
Bearish reversals (caused by long liquidation):
Conversely, when long-term liquidations rise, it signals that bulls are losing control and are forced to exit their positions. This often leads to accelerated price declines as the liquidity generated by these liquidations fuels the downtrend.
🔮 Final Predictions: What's Next?
In the short term (next two months):
Bullish bias: The market may witness a short squeeze that pushes prices back towards the $60,000-$65,000 range if short liquidation starts to pick up.
Downside Risk: If long liquidations start to dominate, we expect a decline towards the $40,000 support level, with further downside risks if it is broken.
Long-term (6 months or more):
Upside Target: Prices could see a steady recovery towards $80K or higher if the market successfully absorbs over-leveraged short positions.
Bearish Breakdown: If the market drops below major support levels ($30,000), a long liquidation could drag the market to $20,000 or even lower.
🎯 Professional Tips for Traders:
Watch for liquidation events: Watch for liquidation spikes (both long and short) to see if bulls or bears are overleveraging. These events often precede major price movements.
Use filter zones for entry/exit: Areas with heavy filtering often represent good entry or exit points, as they indicate where market reversals may occur.
Don’t Over-Leverage: Many of the traders in this chart fell victim to over-leveraging during both bull and bear markets. Use reasonable leverage to avoid getting liquidated on the next big move.