Risk of billions of dollars in positions liquidated with 10% Bitcoin fluctuation... Derivatives market 'Max Pain' analysis

Source: BlockMedia Original Title: “Even a 10% move can liquidate billions of dollars… Where is the Bitcoin derivatives market’s ‘Max Pain’?” Original Link: https://www.blockmedia.co.kr/archives/1025664 The analysis suggests that a 10% move in Bitcoin(BTC) price could trigger the liquidation of leverage positions worth billions of dollars. In the derivatives market, the liquidation volume during upward movements is larger than during declines, indicating that short-term upward volatility pressure is dominant.

“78 Billion Dollars Liquidated if Price Rises 10%”

Trader Ted Pilos stated, “If Bitcoin rises 10%, approximately $7.79 billion(11.2 trillion 565.5 billion KRW) worth of short positions will be liquidated,” adding, “Conversely, a 10% drop would liquidate about $6 billion(8.67 trillion KRW) worth of long positions.”

This estimate is based on the distribution of leverage positions accumulated on major derivatives exchanges. It implies that if prices change sharply in a certain direction, forced liquidations could cascade, amplifying volatility.

‘Max Pain’ is Upward… Structural Pressure

Ted Pilos analyzed, “Currently, the Max Pain is still above,” meaning the price level where the most market participants incur losses.

In the current structure, more positions are liquidated during upward movements than downward. This suggests that short positions are excessively accumulated. If Bitcoin breaks through resistance levels, a short squeeze could occur, causing rapid price jumps.

However, the presence of upward pressure does not necessarily confirm the direction. Long positions could also see $6 billion(8 trillion 670 billion KRW) liquidated during a 10% decline, indicating that both sides are in high-risk zones.

Is this a Signal of Overheated Derivatives Market or a Short-term Warning?

Experts view these figures more as “warning signals rather than trend confirmation.” As leverage increases, price volatility is more likely to be driven by liquidation mechanisms than by actual demand.

One derivatives analyst said, “Currently, Bitcoin is in a state where even small catalysts can cause sharp fluctuations,” adding, “The clearing of derivatives positions may lead volatility more than spot market supply and demand.”

Market watchers also suggest that short-term catalysts could include the US Federal ReserveFed and Fed monetary policy directions, as well as flows into spot Bitcoin ETFs.