Today’s decline in Bitcoin’s price was driven less by spot market selling and more by forced liquidations in the derivatives market. As shown in the chart, sharp price drops coincide with spikes in long liquidations, indicating that the move was largely liquidation-led.
The root cause lies in the buildup of highly leveraged long positions in futures markets. When price falls below key levels, these positions breach maintenance margin requirements and are forcibly closed. These liquidations execute as market sell orders, adding sudden selling pressure and pushing the price even lower.
Crucially, liquidations are not just a consequence of falling prices — they act as an amplifier. Even a modest initial decline can trigger a cascade of forced selling, where one liquidation leads to another. The liquidation spikes seen in the latter part of the chart clearly visualize this chain reaction.
In this context, the current move should be viewed less as a collapse in fundamental demand and more as a structural deleveraging event. Once the bulk of leveraged positions are flushed out, price action often stabilizes. The next key question for the market is how much leverage has already been cleared — and whether the system is now in a healthier, more balanced state.
Written by XWIN Research Japan
