Bitcoin's Rally Leaves Long Traders Exposed to Downside Liquidation Risk
Bitcoin's recent rally to $87,400 has left long traders exposed to downside risk. This is because the move above the 365-day moving average cleared the largest short-liquidation clusters built up over the previous year, shifting leveraged exposure towards long positions.
This structure raises concerns that a retreat back towards the 365-day moving average near $80,000 could trigger significant liquidations, potentially exposing levels near the 200-day moving average at $71,000 and traders' realized price near $67,000.
The Bull Score Index reached 90 out of 100 after Bitcoin reclaimed the 365-day moving average, but several demand measures weakened simultaneously. Spot demand declined by approximately 170,000 BTC over the past 30 days through Sept. 29, while futures-demand growth fell from around 164,000 BTC on Sept. 14 to 16,000 BTC on Sept. 29, a decline of about 90%.