The Liquidation Trap: When the Market Hunts Long Positions
The main catalyst behind this Bitcoin crash is a cascade of liquidations. On-chain data shows a massive accumulation of leveraged long positions (bullish bets) in the $89,500 to $90,300 zone. This area has become a prime target for market makers. By pushing the price just below this threshold, they trigger forced selling of these positions, which amplifies the decline and creates a domino effect. It’s a classic purge, but one of rare violence, designed to “clean” the market of excess leverage before a potential new move.
Meanwhile, we’re observing a concerning divergence: while retail investors rush to buy the dip, whales (large wallets) are selling aggressively. This is a typical pattern at market tops, where the most informed players distribute their holdings to a crowd of less experienced buyers. Fear sentiment is at its peak, even higher than during previous lows, indicating extreme tension in the market.
The Invisible Hand of Coinbase and BlackRock?
Beyond the simple mechanics of liquidations, accusations of more sophisticated manipulation are emerging. A dynamic involving BlackRock, the world’s largest asset manager, and Coinbase, one of the major exchanges, is being called into question. According to several analysts, the scheme would be as follows:
- BlackRock transfers massive amounts of Bitcoin (often more than $500 million) from its ETFs to Coinbase.
- Coinbase conducts a gradual sale of these Bitcoins on the market (a technique called “TWAP sell”) to avoid impacting the price too brutally, but creating constant selling pressure.
- Simultaneously, Coinbase would increase its own short positions (bearish bets), profiting from the decline it helps orchestrate.
This strategy, which has reportedly been in place for over a week, would explain Bitcoin’s difficulty maintaining a bullish trend. The only way for the market to resume its upward trajectory would be a slowdown in these outflows from BlackRock’s ETFs. Yesterday’s session, which saw no such outflows, coincided with a temporary lull.
Short Covering Rally and the Key $93,600 Level for Bitcoin
The bounce observed from $89,900 might be nothing more than a flash in the pan. This is likely a “short covering rally,” a technical rebound caused by short sellers buying back their positions to take profits, rather than a new wave of fundamental buying. The real test for Bitcoin lies at the $93,600 level, which corresponds to the yearly open price.
As long as Bitcoin fails to reclaim this level and transform it into support, the market will remain in a “gray zone” with a high risk of further decline. A failure at this level would confirm that selling forces still have control and that the liquidation hunt could resume, with potentially much lower targets.
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