The cryptocurrency market is at a pivotal point due to huge clusters of liquidations threatening both short sellers and long buyers. The latest figures indicate that nearly $8.12 billion in short position liquidations and $6.86 billion of long position liquidations are a likely headwind due to potential forced liquidation. In December 2025 alone, there was more than $1 billion of liquidation in one day resulting from multiple liquidations creating danger for at least 219,000 traders.

The liquidation heatmap demonstrates over-leveraged positions lying at the pivotal price levels. According to market analyst Ash Crypto, the following liquidation scenarios are at risk of realization with the rally of Bitcoin by just 10% – Short positions of $8.12 billion and long positions totaling $6.86 billion that will get wiped out because of a dump of BTC by the same percentage.

Early December, there was a forced liquidation event in crypto markets that caused approximately $646 million worth of leveraged trades to be liquidated. Approximately 90% of all liquidated assets were long positions, and the single largest liquidated order was for $14.48 million in ETH-USDC at Binance.

Weekend trading sessions can be very risky for leveraged traders because bitcoin experienced such volatility over early December 2025 it dropped $4,000 in less than 24 hours to under $86,000. The reason for this extreme price movement is the shallow nature of the liquidity in the market and excessive leveraged trades causing dramatic movements in the markets during non-peak (off) trading hours.

According to Ben Emons from Fedwatch Advisors, bitcoin exchanges have large levels of leverage, reaching up to 200x in some cases. There is estimated to be $787 billion of perpetual crypto futures with outstanding leverage and only $135 billion of total outstanding ETF assets. The crypto derivatives market continues to be dangerously top heavy.

Retail traders suffered from volatility in 2025 with high leverage ratios commonly in the 10x to 20x range to amplify losses during such severe price corrections. As prices hit pivotal levels and these sheer off liquidation clusters are concentrated, automated exchange systems know no mercy in forcing out positions, generating further pressure. This leads to a self-reinforcing cycle where liquidations drive more liquidations and amplify the amount of volatility, much more than what the fundamentals might imply.

Traders are watching several key technical zones very carefully. The $86,000 level has become an important battleground. If Bitcoin can’t get out of this zone, the price can fall to the lower $83,000 – $85,000 range before any real recovery occurs.

Below these support areas are dense clusters of stop loss orders from traders who are still holding long positions. Any prolonged move under $83,000 could lead to forced selling, which could push Bitcoin to lower liquidation zones.

On the other hand, a strong break above $90,000 could cause a dramatic move towards the $91,500 to $93,000 range where the short liquidation would begin in earnest. With $8.12 billion worth of vulnerable short positions, such a short rally could create a “short squeeze,” a sudden spike in price based mostly on forced buying as short sellers rush into close short positions.

With more than $15 billion of leveraged risk across the current marketplace, participants need to exercise caution because the concentration of leverage at specific price points creates liquidation levels that can be easily triggered by small price fluctuations. As a result, it becomes critical for those using leverage to significantly reduce their leverage ratios, especially during weekends when volatility remains high; therefore, individuals focused on preserving capital over aggressively speculating will have a competitive advantage when stability returns to the markets.

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