Bitcoin is about to usher in a big liquidation storm! Huge short orders may detonate the market. Is it really the right time to enter the market?
If the price of Bitcoin breaks through $62,000, the accumulated short order liquidation intensity on the mainstream cryptocurrency exchange (CEX) will reach $1.205 billion; conversely, if the price of Bitcoin falls below $59,000, the long order liquidation intensity will reach $1.092 billion. This means that the market may usher in a liquidation storm, and potential price fluctuations will trigger a large-scale capital surge.
Don't be carried away by market sentiment, stay calm!
For contrarian investors, this liquidation chart shows that there are huge potential risks in the market, not a simple "entry time". The following are some in-depth analysis and suggestions:
1. Violent market fluctuations caused by liquidation
Market liquidations are usually accompanied by huge price fluctuations. When a large number of contracts are liquidated, prices will rise or fall rapidly. As the data shows, once the price breaks through or falls below a key level, the market may experience a short-term sharp rebound or pullback. This volatility may be a profit opportunity for ordinary investors, but for contrarian investors, they should pay more attention to the calm time after the market sentiment overreacts.
2. The battle between short and long orders
There are a lot of short and long orders in the current market, which means that the market direction is very likely to change dramatically in a short period of time. Usually, the first reaction to breaking through or falling below a key level will trigger panic buying or selling in the market, which will push the price to move faster in one direction. However, this movement is often short-lived (false breakthrough), and the market will eventually return to rationality. Contrarian investors should remain calm in such extreme market conditions, not blindly follow market sentiment, and avoid entering the market during high volatility.
3. Contrarian investment strategy: wait for opportunities after the market calms down
After the market is cleared, prices tend to quickly pull back to reasonable levels. This pullback may be a good opportunity for contrarian investors to enter the market, especially when market sentiment cools down.
Keep cash reserves and be prepared for emergencies
In the current market environment, if the market moves further down, better investment opportunities may appear. Contrarian investors should remain flexible and be ready to seize opportunities brought by market corrections.
