Bitcoin tested the bottom of $112,500 twice: $67 billion in open contracts triggered $2.3 billion in leveraged liquidations, with the key rebound level looking for a breakthrough at $115,000.

Bitcoin tested the support level of $112,500 twice this month, with $67 billion in unclosed futures contracts exposing the market to high leverage risks. On-chain data shows that this round of decline was mainly triggered by the liquidation of $2.3 billion in leveraged positions, rather than selling by long-term holders. The net realized profit and loss indicator after fluctuation adjustment confirms that profit-taking activities have明显减弱.

Futures leverage is the core inducement of fluctuation

(Bitcoin Futures Position Change | Source: Glassnode) Bitcoin has recently shown significant volatility, dipping to the $112,500 level twice this month. Although the price trend has raised concerns in the market, analysis indicates that this pullback is mainly driven by leveraged positions and is unlikely to sustain under the overall market conditions. Futures market activity dominates market sentiment, while on-chain profit-taking activities have remained relatively restrained during the formation of the latest historical high and the subsequent adjustments.

Currently, the open contracts of Bitcoin futures remain at a high of 67 billion USD, indicating a significant leverage risk in the market. While leverage can amplify returns, it also exacerbates price fluctuations—recent market movements have fully confirmed this characteristic. Notably, in this round of dumping, over 2.3 billion USD of open contracts were liquidated, setting a record for nominal value decline (only 23 trading days have seen liquidation scale exceed this), highlighting the speculative nature of the market: even slight price changes can trigger a chain reaction of leveraged position liquidations.

On-chain data reveals that holders' confidence is stable

(Net realized profit and loss adjusted for Bitcoin volatility | Source: Glassnode) After the fluctuation adjustment, the net realized profit and loss indicator shows that profit-taking activities have明显减弱 recently. In comparison to the scenarios when Bitcoin broke through the $70,000 and $100,000 levels in 2024, the significant profit realization volume indicated that investor activity was extremely high, and the market successfully absorbed the selling pressure from existing coin holders. However, when the market hit the historical high of $122,000 in July this year, the lower profit-taking volume suggested a change in market behavior patterns.

One explanation for this dynamic is that despite the reduced selling pressure from existing holders, the market still struggles to maintain upward momentum. A lack of strong profit-taking may indicate insufficient demand to absorb the supply, which explains why the market enters a consolidation phase with limited movement trends after reaching new highs.

Key technical levels determine the market direction Bitcoin is currently priced at $114,200, rebounding for the second time this year from the support level of $112,526. Given that this drop is mainly due to leverage-related dumping, the expected recovery will continue. If Bitcoin successfully breaks through the resistance level of $115,000 and converts it into support, the next target will be $117,261. Maintaining this support level is key to continuing the bullish trend and may pave the way for a push towards the $120,000 mark.

Conversely, if it fails to effectively break through $115,000 or investors accelerate selling, the price may fall below the support level of $112,526. In this case, Bitcoin could further test the $110,000 level or even lower positions, which would invalidate the current bullish argument and potentially open up a longer-term bear market phase.

[Conclusion] The Bitcoin leverage liquidation storm reveals the double-edged sword effect of the derivatives market, with $2.3 billion in contracts closing positions actually removing obstacles for a healthy rise. On-chain data confirms that long-term holders have a strong reluctance to sell, and the effectiveness of the $112,526 double bottom support will become a watershed for bulls and bears. Investors need to focus on the breakthrough situation at $115,000 and the changes in open futures contracts. After the leverage risk is cleared, a more stable upward trend may emerge.