Bitcoin Liquidation Dominance Hits Multi-Year High: The Real Cause Behind BTC’s Breakdown
Overview
Bitcoin is currently facing significant selling pressure, trading below a key psychological level. The recent market activity has been characterized by aggressive long liquidations, leading to increased uncertainty and fear among traders.
What Happened
Bitcoin has struggled to recover after several days of heavy selling. Sellers continue to push the price lower, while buyers are unable to regain momentum. Each attempt to bounce is met with immediate resistance, indicating that bears have control over the market.
Data shows a notable shift in derivatives pressure, with the liquidation dominance oscillator reaching a level of 32%. This indicates that leveraged bulls are taking the brunt of the damage, as long positions are consistently being liquidated amidst rising volatility. Instead of stabilizing the market, the unwinding of these positions fuels further downside movements and hampers any meaningful recovery attempts.
The market has witnessed multiple waves of long liquidations, with each wave exceeding substantial amounts. These liquidations have been linked to sharp declines in Bitcoin’s price, as forced selling amplifies downside momentum rather than providing support. The most recent liquidation wave, amounting to a significant figure, occurred just as Bitcoin attempted a short-term recovery, reversing any gains and dragging the price back down.
Impact on the Crypto Market
- The liquidation dominance oscillator indicates a high level of stress among leveraged bulls.
- The persistent long liquidations create additional selling pressure, complicating recovery efforts.
- Bitcoin’s price has dropped significantly, testing critical support levels that could dictate future market trends.
- Selling spikes reflect a mix of forced liquidations and fear-driven exits, contributing to a bearish sentiment.
- The market remains vulnerable to deeper retracements as long as Bitcoin trades below key moving averages.
Updated: 12/3/2025, 4:32:12 AM
