Bitcoin’s Wild Ride: Brace for the $74K Liquidation Tsunami! 🚨

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What to know:

  • The Treasury basis trade is unraveling like a cheap sweater, pushing bond yields higher and squeezing liquidity tighter than a miser’s wallet.
  • U.S. stock futures are wilting faster than a salad in the sun, and BTC is feeling the heat.
  • A drop to $73.8K-$74.4K could send leveraged long bets packing faster than a tourist in a monsoon.

The worst fears for risk assets, including cryptocurrencies, are coming true, and that has raised the risk of bitcoin (BTC) falling below $74,000 in a move that could shake out leveraged long bets like a bartender shaking a cocktail.

On Sunday, CoinDesk discussed the possibility of pronounced downside volatility in risk assets due to a potential unwinding of the Treasury market arbitrage bets, a dynamic that catalyzed the 2020 crash. Because, you know, history loves to repeat itself when you least expect it.

Per observers, the unwinding of the so-called carry trades, involving hedge funds exploiting minor price discrepancies between Treasury futures and securities, has begun. That’s evident from the nearly 70 basis points rise in the U.S. 10-year Treasury yield to 4.5%. The 30-year yield has seen a similar rise. Note that yields move in the opposite direction of prices and typically drop during risk aversion as investors seek refuge in government bonds. Because nothing says “safety” like a piece of paper that promises to pay you back in 30 years.

“It’s all running vertical now with 30-year Treasury yields on the cusp of hitting the 5% mark. For some context, 10-year yields in the US were at a low of 3.88% on Monday. This points to further liquidation in Treasuries and that’s a sign that we are seeing distress in the parts of the market that we should not normally talk about i.e. funding, credit, repo,” ForexLive’s analyst Justin Low said in a market update discussing the implosion of the basis trade. Because when the market implodes, it’s always the parts you don’t talk about that get hit hardest.

Low added that it’s “all going sideways at the moment” as a sharp rise in yields itself can have a far-reaching impact on markets, housing and the economy. Because nothing says “economic stability” like a sharp rise in yields.

Stocks drop, BTC under pressure

Futures tied to the S&P 500, Wall Street’s benchmark equity index, fell 2% amid increased volatility in the Treasury market. Bitcoin fell briefly below $75,000 early today and has since recovered to trade near $76,000, CoinDesk data showed. Because when the going gets tough, the tough get going… or at least try to.

The MOVE index, which represents the options-implied 30-day price turbulence in the Treasury market, jumped to 140, the highest since October 2023, according to data source TradingView. Because nothing says “turbulence” like a jump in the MOVE index.

The worsening of the risk sentiment has raised the risk of BTC falling to the $73.8K-$74.4K range, where holders of bullish long positions in the perpetual futures listed on major exchanges face liquidation risks, according to data tracked by analytics firm Hyblock Capital. Because when the market turns, it’s always the bulls that get gored.

Liquidation represents the forced closure of positions by exchanges due to margin shortages. Large long liquidations often add to downside price volatility. Because nothing says “volatility” like a forced closure of positions.

“We see long liquidation clusters (where we estimate liquidations to get triggered) at 73800-74400, 69800-70000, 66100-67700. In particular, if we hit 70k, we likely go down at least $200 more, taking the retail stop losses right below 70k and the liquidation levels liquidity,” Hyblock told CoinDesk. Because when the market falls, it’s always the retail investors that get hit hardest.

On the higher side, Hyblock identified $80,900-$81,000, $85,500-$86,700, and $89,500-$92,600 as prominent zones for potential short liquidations. Because when the market rises, it’s always the shorts that get squeezed.

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2025-04-09 09:11