Bitcoin Sales Ignite the Fuse: How to Profit from Liquidation According to Santiment? - Coin Bulletin

Although there was a great panic in the markets when Bitcoin dropped to 92 thousand dollars, this wave of liquidation also sparked the fuse for a rapid recovery.

According to Santiment data, the largest liquidations in the past 6 months have occurred in the cryptocurrency markets. When the Bitcoin price dropped below $92,000, there were massive losses in leveraged trading and the market was shaken by forced selling. However, such large sell-offs do not always have a negative impact. On the contrary, the clearing of over-leveraged positions can help Bitcoin establish a stronger foundation. Indeed, Bitcoin showed a significant recovery by rising from $92,000 to $102,000 in just 24 hours.

Liquidations refer to the mandatory sale of credit collateral. Especially in the case of loans on DeFi platforms, if the value of the assets held as collateral decreases, the system automatically executes a sale. This situation may create chain selling pressure, causing the price to fall even further. However, when this wave ends, a strong buying opportunity arises due to the lack of sellers in the market. According to Santiment data, prices generally recover quickly after large-scale liquidations.

Leveraged transactions cleared by liquidations make the market healthier while opening up great opportunities for opportunistic investors.

Do those who follow major liquidations win?

Santiment claims that data analysis platforms can help investors predict sudden movements in the market. Experienced investors who track liquidation data can identify points where overselling occurs and turn these drops into buying opportunities.

The rise of Bitcoin from $92,000 to $102,000 shows how buying pressure has quickly come into play after major liquidations. As leverage declines, excessive volatility in the market is balanced, providing a more stable environment for long-term investors.

Santiment advised investors as follows:

While short-term volatility may unsettle investors, historically major liquidations indicate the market reaching bottom levels and the resumption of upward momentum. As leveraged positions are unwound, experienced investors closely monitor liquidation data to anticipate future price fluctuations. Tracking data analysis platforms like Sanbase can provide important clues in predicting when the next volatility wave will create a strong buying opportunity.