Bitcoin's price has declined by over 3% in the past 24 hours, attributed to a long squeeze in the perpetual futures market, as reported by CryptoQuant. At the time of publication, Bitcoin was trading at $63,714, according to data from The Block.
The recent rise in Bitcoin long liquidations coincided with a wave of caution in equity markets, influenced by anticipated interest rate hikes from the Bank of Japan (BoJ). Julio Moreno, Head of Research at CryptoQuant, stated that the data reflects a long squeeze, with a significant spike in liquidations.
A long squeeze occurs when the asset's price declines, forcing traders with leveraged long positions to sell or risk liquidation to meet margin requirements. This selling pressure can further decrease prices, creating a cycle of additional margin calls and forced liquidations.
In the last 24 hours, a total of 64,838 traders have been liquidated, leading to a total of $181 million in liquidations across centralized exchanges, according to Coinglass. Bitcoin led the cryptocurrency market with nearly $49 million in liquidations, predominantly from long positions.
CryptoQuant analysts noted increasing speculation in the cryptocurrency futures market, with open interest reaching approximately $19.1 billion. They highlighted that since March 2024, open interest has exceeded $18.0 billion only six times, each instance followed by a price decline.
The analysts remarked, 'The futures market shows signs of overheating, marking the seventh occurrence of open interest surpassing $18.0 billion.'
On Friday, Japan's ruling party appointed Shigeru Ishiba as the next prime minister, which could prompt changes in the country's monetary policy. Ishiba's support for interest rate hikes by the BoJ has generated caution in global stock markets, tempering the risk-on sentiment that emerged after China's latest economic stimulus measures.
Investors are wary of a repeat of the yen carry trade unwind that occurred in late July, which led to a rapid plunge in Bitcoin's price from $70,000 to below $50,000.
Ishiba’s appointment resulted in a renewed appreciation of the yen, while Japan’s Nikkei 225 Index experienced a 4.8% drop, its sharpest decline in eight weeks, impacting global equities. Despite this, China's Shanghai Composite surged over 8%, marking its biggest increase since 2008 following new stimulus measures.
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