BTC is under attack by 526 million in liquidations, currently in the most dangerous position

Bitcoin is currently in a delicate situation. According to the latest news, if BTC falls below $86,699, the cumulative long liquidation strength on mainstream CEXs will reach $526 million; conversely, if BTC breaks above $94,519, the cumulative short liquidation strength on mainstream CEXs will also reach $526 million. The current BTC price at $90,594.73 sits precisely between these two liquidation levels. This means that whether the price breaks upward or downward, it could trigger a large-scale chain liquidation.

The Price Vacuum Zone Created by Liquidation Clusters

Symmetry of Liquidation Levels

The current liquidation landscape exhibits an unusual symmetry:

This symmetrical distribution of liquidation levels indicates that market participants’ long and short positions are relatively balanced, but it also means that any breakout in either direction could cause intense volatility.

Significance of Liquidation Strength

It should be noted that liquidation strength does not represent the exact number of contracts pending liquidation but rather reflects the importance of each liquidation cluster relative to neighboring clusters. In other words, higher liquidation bars suggest that reaching that level could provoke a stronger market reaction due to liquidity waves. The $526 million liquidation strength is quite substantial in the current market.

Historically, this number isn’t particularly high. For example, on January 10th, if BTC dropped below $89,000, the long liquidation strength reached $894 million; on January 9th, at the same level, it was $1.127 billion. This indicates that recent liquidation pressure has eased somewhat, but caution remains necessary.

Market Divergence Revealed by Capital Flows

Long-term Funds Are Exiting, Short-term Funds Are Entering

Over the past 7 days, CEXs have net outflows of 6,317.80 BTC, a clear signal of long-term capital leaving the market. Investors withdrawing to self-custody wallets typically indicate caution about medium-term prospects. However, in the past 24 hours, CEXs have seen a net inflow of 1,118.84 BTC, suggesting short-term capital is accumulating.

This contradictory capital flow reflects market segmentation: long-term investors are risk-averse, while short-term traders are buying the dip.

Funding Rates Have Shifted from Bearish to Neutral

According to the latest data, the funding rates on major CEXs and DEXs have returned to neutral levels:

• Binance: -0.0028%
• OKX: -0.0045%
• Bybit: 0.0002%

This indicates that the market no longer has a bearish outlook on BTC. In contrast, altcoins still exhibit large-scale negative funding rates, suggesting market confidence in BTC is recovering, while concerns about smaller tokens persist.

Risk Assessment at the Current Level

Downside Risks

If BTC drops below $86,699, the $526 million long liquidation will be triggered. This could lead to:

• Forced liquidation of many longs
• Increased selling pressure
• Potential chain reaction of liquidations

From a technical perspective, BTC has declined 0.92% over the past 7 days. Although the move isn’t large, combined with the existence of these liquidation levels, downside risk should be taken seriously.

Upside Risks

If BTC breaks above $94,519, the $526 million short liquidation will be triggered. This could result in:

• Forced liquidation of many shorts
• Rapid upward movement
• Attraction of more chasing-buyers

Fundamentally, BTC’s market cap accounts for 58.42%, indicating it still holds the highest market attention. A breakout above this level could boost overall market sentiment and risk appetite.

Key Levels and Outlook

Personally, I believe that BTC’s future movement will largely depend on:

• Short-term: Whether it can effectively break above $94,519. A successful breakout could lead to further gains; failure might result in a retest of lower liquidation levels.
• Mid-term: Changes in capital flows. If the outflow trend from long-term funds halts, it signals improving market sentiment; if not, caution is warranted.
• Sentiment: Direction of funding rates. A shift from neutral to positive funding rates indicates increasing bullish sentiment.

Based on current information, BTC is in a relatively balanced but unstable state. Any strong breakout in either direction could trigger significant volatility. Investors should prepare for large swings in both directions.

Summary

BTC is currently sandwiched between two $526 million liquidation levels, forming a relatively narrow “vacuum zone.” This symmetrical distribution of liquidations reflects a balance of bullish and bearish forces but also suggests that any breakout could trigger chain reactions.

From capital flows, the market shows divergence: long-term funds are exiting to avoid risk, while short-term funds are accumulating opportunities. Funding rates have shifted from bearish to neutral, indicating a recovery in market sentiment.

The key point is that this position is somewhat fragile. Investors should closely monitor the levels at $86,699 and $94,519. Breaking either one could lead to pronounced directional moves. In this environment of liquidation clustering, risk management and flexibility are more important than trying to predict the exact direction.