Bitcoin Liquidations Flatten to Multi-Month Lows, Hinting at a Major Volatility Shift

Source: ETHNews Original Title: Bitcoin Liquidations Flatten to Multi-Month Lows, Hinting at a Major Volatility Shift Original Link: https://www.ethnews.com/bitcoin-liquidations-flatten-to-multi-month-lows-hinting-at-a-major-volatility-shift/ The Bitcoin derivatives market has entered an unusually calm phase, with total liquidations dropping to their flattest levels in months.

New data from CoinGlass shows that both long and short liquidations have compressed into a narrow band, a rare setup that often precedes sharp volatility. The chart highlights a prolonged period of minimal liquidation activity across all positions, signaling that leverage has been drained from the market after weeks of aggressive unwinding.

A Market Paused After Heavy Deleveraging

Bitcoin has spent much of the past month grinding lower, triggering frequent spikes in long liquidations and forcing overleveraged traders out of their positions. Now, however, liquidation waves have almost disappeared. This typically occurs when traders reduce leverage, exchanges become stricter with margin requirements, and uncertainty leads to cautious positioning on both sides.

Such low liquidation activity signals the market is in a standby mode, with participants waiting for the next catalyst to determine direction. Historically, similar flat periods have come before renewed volatility, either strong recoveries or deep corrective moves.

Traders Expect a Breakout After the Compression

The narrow liquidation bands suggest that neither bulls nor bears are currently overexposed. When the market becomes this balanced, the next price move tends to be driven by new information: macro events, ETF flows, regulatory decisions, or sudden institutional accumulation.

Analysts note that volatility compression is often followed by a decisive expansion, meaning traders may soon face a significant breakout.

For Bitcoin, the question is which side will gain the upper hand as liquidity rebuilds. With derivatives activity muted, spot market flows, from whales, ETFs, or large buyers, are likely to have a stronger impact on price direction.

Why This Setup Matters for the Broader Market

Low liquidation phases can create a false sense of stability. While the market appears calm, beneath the surface liquidity thins out, making it easier for large orders to trigger outsized price swings. Traders often interpret these zones as the prelude to sharp movements, and many hedge funds use them to reposition for upcoming volatility.

If Bitcoin breaks upward with renewed spot demand, the lack of short leverage could accelerate a squeeze. Conversely, if sellers return, a scarcity of long leverage may limit immediate downside cascades, until new leverage builds.

Bitcoin’s Next Move May Arrive Suddenly

With Bitcoin’s liquidation chart flatter than it has been in months, traders are preparing for the market’s next decisive move. The compressed setup suggests that volatility is not disappearing, it is merely gathering strength. In past cycles, such conditions preceded abrupt trend shifts, making this calm period a critical moment to watch for signals from spot flows, ETF activity, and macro catalysts.