Bitcoin price decline comes amid futures market 'long squeeze': CryptoQuant

Quick Take

  • Bitcoin’s price dropped by over 3% in the past 24 hours amid a “long squeeze” in the perpetual futures market, according to CryptoQuant data.
  • The crypto market downturn coincided with growing caution in global equities as investors brace for potential interest rate hikes from the Bank of Japan that could impact overall risk sentiment.

Bitcoin's price has fallen by over 3% in the past 24 hours amid a "long squeeze" in the perpetual futures market, according to research from CryptoQuant. It was trading at $63,714 as of publication time, according to The Block's bitcoin price page

The recent spike in bitcoin long liquidations coincided with a wave of caution sweeping through equity markets as investors weighed expectations of another interest rate hike from the Bank of Japan (BoJ).

"Bitcoin perpetual futures market data shows that there was a long squeeze in recent hours, as long liquidations spiked," CryptoQuant Head of Research Julio Moreno told The Block. A long squeeze occurs when the price of an asset, like bitcoin, declines, forcing traders with leveraged long positions to either sell or face liquidation to meet margin requirements. This selling pressure can further drive prices down, triggering additional margin calls and forced liquidations, amplifying the downward momentum.

Bitcoin long liquidations spike

In the past 24 hours, a total of 64,838 traders have been liquidated, resulting in total liquidations across centralized exchanges amounting to $181 million, according to data from Coinglass. Bitcoin led the cryptocurrency market in liquidations, with nearly $49 million liquidated during this period. Of these bitcoin liquidations, over $40 million were attributed to long positions.

Bitcoin's price drop comes amid a "long squeeze" in the perpetual futures market.Image: CryptoQuant.

On Sunday, CryptoQuant analysts highlighted growing speculation in the cryptocurrency futures market as open interest—the total value of outstanding contracts—reached approximately $19.1 billion. They pointed out that since March 2024, open interest has exceeded $18.0 billion only six times, each time followed by a price decline.

"The futures market shows signs of overheating, with open interest around $19.1 billion. Since March 2024, it has surpassed $18.0 billion six times, and each instance resulted in a price drop, this marks the seventh occurrence," the analysts noted.

Bitcoin perpetual futures open interest shows the market is "overheating." Image: CryptoQuant.

Japan’s leadership change sparks caution in global markets

On Friday, Japan's ruling party selected Shigeru Ishiba as its next prime minister, a choice that could lead to a potential shift in the country's monetary policy. Ishiba has been known to support further interest rate hikes by the BoJ, a position aligned with that of the central bank's governor Kazuo Ueda.

Anticipation of possible future rate hikes by the BoJ has instilled caution in global stock markets, tempering the recent risk-on sentiment that had emerged following China's latest draft of economic stimulus measures and the U.S. Federal Reserve's rate cut on September 18.

Investors remain wary of a repeat of the yen carry trade unwind that occurred in late July, which panicked financial markets and led to bitcoin's rapid plunge from $70,000 to below $50,000 in a matter of days.

Ishiba’s appointment triggered a renewed appreciation of the yen, but Japan’s Nikkei 225 Index dropped 4.8%—its sharpest decline in eight weeks. This ripple effect was felt in global equities. On Monday, the S&P 500 and Dow Jones Industrial Average edged lower after the Dow had reached a record high on Friday. However, in contrast, China’s Shanghai Composite surged over 8%, its biggest jump since 2008, following Beijing's new stimulus measures.


Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.

© 2024 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

About Author

Brian McGleenon is a UK-based markets reporter for The Block. He has worked as a financial journalist and producer for multiple news outlets over the years, such as Fuji Television, The Independent, Yahoo Finance, The Evening Standard, and The Daily Express. Brian is also a screenwriter and producer with one feature film produced and one in development with Northern Ireland Screen. Apart from web3 and cryptocurrency developments, he is also interested in geopolitics, environmental issues, artificial intelligence, and longevity research. Get in touch via email [email protected].

Editor

To contact the editor of this story:
Lawrence Lewitinn at
[email protected]

WHO WE ARE

The Block is a news provider that strives to be the first and final word on digital assets news, research, and data.

+ Follow us on Google News
Connect with the block on