Bitcoin traded above $64,000 on Tuesday as buyers defended the market against rising oil prices and Treasury yields. The asset gained about 1.2% over 24 hours, supported by short liquidations and renewed daily crypto exchange-traded fund inflows.
Still, growing leverage creates a clear downside risk. Analysts identify $57,000 as the main liquidation zone for bullish futures positions. Thin market liquidity could deepen any decline if forced selling reaches that level.
Futures traders use collateral to control positions larger than their initial deposits. This leverage increases potential returns, but it also raises losses when prices move against their bets.
Exchanges close leveraged positions when traders no longer hold enough collateral to cover their losses. These forced closures can create more selling pressure and pull prices lower within a short period.
Joao Wedson, chief executive of Alphractal, identified $57,000 as the main risk area for leveraged Bitcoin longs.
“$57,000 is a key region to watch. If Bitcoin trades down into that area, we could see a massive wave of long liquidations,” said Wedson.
Bitcoin open interest rose 6.19% over 24 hours, showing that traders added more leveraged positions. Meanwhile, total Bitcoin liquidations climbed 168% to $73.94 million.
Short positions accounted for $69.96 million of that amount. Their forced closure created buying pressure and supported Bitcoin’s move above $64,000. Yet the rising open interest means leverage remains high across the futures market.
The number of active Bitcoin futures contracts is unusually large compared with daily trading volume. At the same time, fewer orders are available to absorb large market sales without sharp price changes.
This structure could produce a faster decline if Bitcoin reaches the $57,000 liquidation zone. Exchanges may close multiple long positions together, adding new sell orders to an already weak market.
Bitcoin has traded mainly between $60,000 and $66,000 since the June decline. Immediate support sits near $63,000, followed by the recent lows between $62,000 and $62,600.
Analysts at Bitfinex place the long-term holder's realized price at $52,699. They calculate the short-term holder's realized price at $67,176. The realized price median near $63,200 has supported Bitcoin during the past two weeks.
A clear break below $63,200 could return attention to the June low near $57,803. This area sits close to the liquidation level identified by Alphractal.
Bitcoin held above $64,000 even as wider financial conditions weakened. The 30-year Treasury yield rose to 5.33%, its highest level since 2007. Brent crude also moved above $91 per barrel amid continued US-Iran tensions.
Daily demand from US spot Bitcoin ETFs offered some support. The products recorded $137.32 million in net inflows on August 17. Nevertheless, they posted $389.71 million in net outflows during the previous week.
Long-term Bitcoin holders also own about 16.35 million BTC, according to analyst Axel Adler Jr. That figure sits near the record of 16.41 million BTC. Their holdings declined on only two of the previous 15 days.
Bitcoin’s market price near $64,200 stands about 30% above the group’s estimated average purchase price of $49,400. Adler classifies this position as a “Low Risk” zone.
Lower selling from long-term holders limits available supply, although it does not confirm stronger demand. Bitcoin must clear resistance between $65,000 and $66,000 to leave its current range. A drop below $62,000 would place $60,000 and the $57,000 liquidation zone back in focus.
Also Read: Bitcoin Futures Liquidity Gap Puts Sharp BTC Swings in Focus