Bitcoin hits $120,000? A 10% surge could trigger $18 billion in short liquidations

Market Dynamics: August's new high ignites bullish enthusiasm

By the end of this week, BTC/USD hit $118,760 on Bitstamp, a new monthly high (according to Cointelegraph Markets Pro & TradingView). The weekend's "after-hours" market brought a significant amount of liquidations. CoinGlass data shows that total crypto market liquidations reached $350 million over the past 24 hours, with a significant proportion of short positions. This indicates that market liquidity is concentrated, amplifying price fluctuations.
Analysts believe that Bitcoin is currently re-establishing the key support level of $117,200. If the weekly closing can be firmly above this level, it will lay the foundation for further upward movement.

Short squeeze: $18 billion in potential fuel

Well-known trader BitBull said on the social platform X that only a 10% increase could trigger $18 billion in short liquidations (CoinGlass data), which is a potential explosive force in the market.
He also pointed out that although the traditional financial market (TradFi) may suppress gains in the short term after opening, institutions and large funds may take advantage of this liquidation opportunity to increase their long positions.
Another trader, Merlijn, also believes that short squeeze may push BTC to quickly break through $120,000. This level is not only a psychological resistance, but also a potential trigger point for a new round of FOMO sentiment.

Technical Perspective: CME Gap and Short-Term Risk

Crypto investor and entrepreneur Ted Pillows has highlighted an unfilled gap in the Chicago Mercantile Exchange (CME) Bitcoin futures market at $116,500. Historically, this gap has a high probability of being filled, suggesting a short-term price pullback to this level before a rebound.
It’s worth noting that last week, BTC fell $2,000 to fill the CME gap from the previous week, before quickly rebounding. If this historical trend repeats, this pullback could provide a better entry opportunity for bulls.

BTC/USD two-week chart

Capital flows and market sentiment

Daan Crypto Trades pointed out that some market attention has recently shifted to Ethereum (ETH) and altcoins - ETH has broken through multi-year highs, driving funds to flow between different tracks.
Although BTC remains a market bellwether, its pace of breaking through $120,000 may be affected by the diversion of funds. However, once BTC approaches its all-time high (approximately $121,738) again, it will quickly regain market attention.
This means that investors should pay proper attention to market sector rotation while investing in BTC to diversify risks and seize more potential opportunities.

Market analysis and operation direction

In the current market with high optimism, investors should focus on three key points:

1. Key support levels: $117,200 and the CME gap at $116,500 are important observation points in the short term.

2. Breakthrough target: If the $120,000 mark is effectively broken through, it may trigger a new round of bull market.

3. Risk control: During periods of high volatility, stop-loss orders should be strictly set to avoid chasing high prices when emotions are high.
   For long-term investors, the current pullback may be an opportunity to deploy in batches; for short-term traders, they need to flexibly respond to market fluctuations such as filling gaps and breaking through resistance.

Bitcoin is at an important juncture, and the next step may determine the trend of the whole year.

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