Traders are using leverage in an attempt to lift bitcoin back to record highs, creating a high-risk environment that could result in a derivatives unwind to the downside if price begins to shift the other way.
Market analyst Skew warned one trader intent on opening a nine-figure long position to “maybe wait for spot to carry the buying so it doesn’t create toxic flows.”
Bears are also adding leverage, with a separate trader currently dealing with a $7.5 million unrealized loss after shorting BTC to the tune of $234 million with an entry at $111,386. That trader added $10 million worth of stablecoins to maintain their position, with the liquidation currently standing at $121,510.
But the major liquidation risk is present to the downside, with data from The Kingfisher showing a large pocket of derivatives will be liquidated between $113,300 and $114,500, which could potentially prompt a liquidation cascade back to the $110,000 level of support.
“This chart shows where traders are over-leveraged,” wrote The Kingfisher. “It’s a pain map. Price tends to get sucked into those zones to clear out positions. Use this data so you don’t end up on the wrong side of a big move.”
Bitcoin is currently trading quietly around $115,000 having entered a period of low volatility, failing to break out of its current range for more than two months.