Bitcoin price decline comes amid futures market 'long squeeze': CryptoQuant

Bitcoin BTC -3.27% 's price has fallen by over 3% in the past 24 hours amid a "long squeeze" in the perpetual futures market, according to research from CryptoQuant. It was trading at $63,714 as of publication time, according to The Block's bitcoin price page . 

The recent spike in bitcoin long liquidations coincided with a wave of caution sweeping through equity markets as investors weighed expectations of another interest rate hike from the Bank of Japan (BoJ).

"Bitcoin perpetual futures market data shows that there was a long squeeze in recent hours, as long liquidations spiked," CryptoQuant Head of Research Julio Moreno told The Block. A long squeeze occurs when the price of an asset, like bitcoin , declines, forcing traders with leveraged long positions to either sell or face liquidation to meet margin requirements. This selling pressure can further drive prices down, triggering additional margin calls and forced liquidations, amplifying the downward momentum.

Bitcoin long liquidations spike

In the past 24 hours, a total of 64,838 traders have been liquidated, resulting in total liquidations across centralized exchanges amounting to $181 million, according to data from Coinglass. Bitcoin led the cryptocurrency market in liquidations, with nearly $49 million liquidated during this period. Of these bitcoin liquidations, over $40 million were attributed to long positions.

Bitcoin's price drop comes amid a "long squeeze" in the perpetual futures market.Image: CryptoQuant.

On Sunday, CryptoQuant analysts highlighted growing speculation in the cryptocurrency futures market as open interest—the total value of outstanding contracts—reached approximately $19.1 billion. They pointed out that since March 2024, open interest has exceeded $18.0 billion only six times, each time followed by a price decline.

"The futures market shows signs of overheating, with open interest around $19.1 billion. Since March 2024, it has surpassed $18.0 billion six times, and each instance resulted in a price drop, this marks the seventh occurrence," the analysts noted.

Bitcoin perpetual futures open interest shows the market is "overheating." Image: CryptoQuant.

Japan’s leadership change sparks caution in global markets

On Friday, Japan's ruling party selected Shigeru Ishiba as its next prime minister, a choice that could lead to a potential shift in the country's monetary policy. Ishiba has been known to support further interest rate hikes by the BoJ, a position aligned with that of the central bank's governor Kazuo Ueda.

Anticipation of possible future rate hikes by the BoJ has instilled caution in global stock markets, tempering the recent risk-on sentiment that had emerged following China's latest draft of economic stimulus measures and the U.S. Federal Reserve's rate cut on September 18.

Ishiba’s appointment triggered a renewed appreciation of the yen, but Japan’s Nikkei 225 Index dropped 4.8%—its sharpest decline in eight weeks. This ripple effect was felt in global equities. On Monday, the S&P 500 and Dow Jones Industrial Average edged lower after the Dow had reached a record high on Friday. However, in contrast, China’s Shanghai Composite surged over 8%, its biggest jump since 2008, following Beijing's new stimulus measures .