BTC rally sparks $268m in short liquidations

BTC switched to short liquidations, wiping out $15.79M in short positions within an hour. Overall, short liquidations reached a one-week high of over $268M. 

BTC recovered above $117,300 in a rapid shift of sentiment. The move erased over $15.79M in short positions for just one hour. Over $178M in BTC shorts were liquidated in the past day. Based on other methodologies, crypto liquidations were counted as over $600M for the past day. 

BTC recovered the $117,000 level, causing a wave of short liquidations | Source: Coinglass

Sentiment on crypto markets rapidly changed direction following a week of long liquidations. This time around, BTC traders had the choice to dip to the $107,000 range, but the price action moved into liquidating short positions. 

Based on the recent repositioning, BTC has rebuilt long positions at around $113,000 to $112,000, forming a new zone of resistance. However, the current sentiment for ‘Uptober’ may be added to the liquidations to drive BTC higher. 

The trading sentiment remains neutral, suggesting the recent rally may not be sustainable and may be a targeted attempt to de-leverage. The other possibility is a rush to crypto assets as a precaution against the US Government shutdown and the weakness of the US dollar. 

Historically, government shutdowns have led to BTC rallies, followed by rapid corrections. The week of peak long and short liquidations may determine the price direction for the last quarter of a bull market year. Previously, BTC has shown its role as a safe-haven asset, but the early October rally is seen as a potential trap for over-eager traders. 

BTC retains its dominance, ends altcoin season

BTC also showed strength on several markers, with its market cap dominance rising to 57%. The recent BTC rally meant altcoin season ended officially. 

However, the BTC strength also allows for specific altcoin rallies. The recent BTC recovery also boosted the prices of leading coins. ETH recovered above $4,300, BNB stood at $1,022, and SOL returned to $220. 

A series of older coins and tokens from previous bull markets also continue their re-awakening rallies. ZEC, an early privacy coin, broke above $89. 

ETH also stands at a liquidations crossroad

ETH liquidity also has a setup that may push the price in either direction. A hike to $4,400 may liquidate up to $1B in short positions, unless traders close them. Even more liquidity has been building up for long liquidations at $4,200. The short-term fluctuations of ETH are used by strategic whales to compound gains, as Cryptopolitan reported recently. 

The liquidity may shift, and the exact liquidations may change. During the latest market upturn, ETH saw much smaller liquidations compared to BTC, at around $8M in the four-hour time frame, and $152M for the past day. 

Both ETH and BTC have sufficient support from long-term holders and spot buyers. The recent market indicators show BTC may be searching for a local bottom, setting up another year-end rally. 

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