Bitcoin's "leverage trap" at the 90,000 level: What does the liquidation of over 894 million long positions imply

According to the latest data, if Bitcoin falls below $89,000, the cumulative liquidation strength of mainstream CEXs will reach $894 million; if it breaks above $92,000, the short liquidation strength will reach $560 million. Currently, BTC is oscillating around $90,551, and the market is in a critical “leverage danger zone.” What does this data reflect, and what does it mean for traders?

Decreasing Liquidation Strength, but Risks Are Not Gone

Compared to the data on January 8th, when the long liquidation strength below $90,000 was $1.07 billion, it has now decreased to $894 million. It seems that the risk is easing, but this judgment may be overly optimistic.

A decline in liquidation strength usually indicates two possibilities: one is that the previously liquidated longs have exited, reducing the chain reaction risk; the other is that some longs have actively closed positions or reduced leverage, indicating market self-regulation. However, from another perspective, this could also mean that market participation is declining and liquidity is drying up.

The True Meaning of the Current Price Position

BTC is currently around $90,551, exactly in the middle of these two dense liquidation zones. This means: a drop below $89,000 will turn the $894 million longs into a “bulldozer,” accelerating the decline; a break above $92,000 will trigger a short squeeze with $560 million in shorts.

Market Sentiment Is Turning Bearish

Several signals from related data include:

• Coinbase Negative Premium: It has been in negative premium for 3 consecutive days, with 25 out of the past 26 days showing negative premium. This indicates increasing selling pressure in the US mainstream market and a decline in institutional investors’ risk appetite.
• Funding Rates Bearish: Funding rates on major CEXs and DEXs show a generally bearish market, often a sign of accumulating short sentiment.
• Long-Short Position Divergence: Hyperliquid whales’ long-short ratio is 0.89, with a higher proportion of short positions.

All these suggest that the current mainstream market sentiment is bearish, and longs are losing initiative.

The Other Implication of Decreasing Liquidation Strength

The “strength” mentioned in the news is not an exact measure of liquidation amount but rather its relative significance. In other words, the $894 million figure represents the “density” of liquidations, not the total absolute amount.

When liquidation strength decreases, it may reflect a more dispersed distribution of liquidations, with no highly concentrated trigger points. This sounds safer but can actually be more dangerous—once the price breaks a key level, it may trigger layered, scattered liquidations, making it harder to establish effective support.

Insights for Traders

At this moment, the most important thing is to understand: We are in a highly leveraged market, and every price move can trigger chain reactions.

• If you’re long, $89,000 is not just a psychological support but a “life-and-death line.” Falling below could trigger a flood of stop-loss orders, potentially causing a larger decline.
• If you’re short, $92,000 is equally a dangerous zone. Breaking above could lead to massive short covering, possibly causing a quick reversal upward.
• Regardless of position, opening high leverage at this level is essentially “betting that liquidation won’t happen.”

Summary

Bitcoin is currently in a typical “leverage trap” zone. Although the long liquidation strength of $894 million is lower than on January 8th, this does not mean the risk has dissipated; it may instead indicate liquidity is drying up. Coinbase’s persistent negative premium and the bearish funding rates further confirm a shift in market sentiment.

The key to remember is: the liquidation strength chart shows how much the price will be affected when reaching certain levels. When you see such data, the smartest choice is not to bet on who will win but to respect the market structure behind the data, set reasonable stop-losses, and be prepared to follow the trend once it establishes. The next move of the market will likely be determined by these two most densely liquidated zones.