Bitcoin experiences a 'sharp decline to clear leverage'! Analyst: The decrease in forced liquidations may signal the completion of deleveraging
On January 19, CryptoQuant analyst Axel interpreted Bitcoin's early morning crash on social media, pointing out that this is a typical case of a 'sharp decline in an overheated market to clear leverage'.
Data shows that from January 13 to 15, the 'advanced sentiment index' for Bitcoin soared to the extreme bullish range of 80%, coinciding with the price approaching a local high of $97,000.
Today, this index has plummeted to 44.9%, directly falling below the 50% neutral line, with market sentiment shifting from euphoria to caution in an instant.
Axel explained that this index integrates multidimensional data such as volume-weighted average price, net active trading volume, and open contracts. Falling below the neutral line indicates a change in market structure and risk quality.
If it can regain 50% and stabilize, it would be the first signal of market stabilization; however, if it further dips toward the bearish range of 20%, it may trigger a deeper adjustment.
From the details of the crash, the forced liquidation in a single hour exceeded $205 million, and the spot volatility indicator surged to 97.96%, indicating that the forced liquidations were almost entirely dominated by long positions, which were forced liquidations rather than active selling.
Axel pointed out that this is precisely the 'sharp decline to clear leverage' model of an overheated market. If the forced liquidation volume continues to decrease in the next few hours, it will signify that the deleveraging process is nearing completion. @阿二说趋势
$BTC
