BTC and ETH Break Through Despite $1.7B Liquidation Shock — Will the Rally Continue?

The crypto market recently experienced temporary price instability as approximately $1.7 billion in forced liquidations swept through in a single day. Typically, when cumulative leverage in the futures market is suddenly cleared, asset prices tend to break below key support levels, triggering a domino effect of selling. However, the market’s reaction this time shows a trend quite different from previous crashes. After the massive wave of liquidations passed, Bitcoin and Ethereum not only regained price stability quickly but also displayed resilience, further solidifying their upward momentum.

At the heart of this recovery lies a robust technical breakout. Both Bitcoin and Ethereum showed breakout signals by pushing strongly above the upper band of the Bollinger Bands on the daily timeframe. With noticeable volume supporting the move, the strength of the uptrend driving price direction appears to be intensifying. This suggests that even as short-term speculative leverage was being liquidated, buying pressure in the spot market swiftly absorbed the supply and defended price levels.

Of course, from a technical perspective, warning signals indicating a short-term overbought state are being observed, so a cautious approach—monitoring support at key levels following the breakout rather than chasing the price—may be effective. In this report, we analyze the technical performance of major assets that are continuing their upward trend after absorbing the shock of large-scale liquidations, and we outline key price benchmarks and scenario-based responses necessary for sustaining the rally.

Stronger Trend Momentum Absorbs Leverage Liquidation

When massive forced liquidations occur in the futures market, it is typical for selling sentiment to spread to the spot market, triggering a chain reaction of plummeting prices. However, despite the recent $1.7 billion liquidation shock, Bitcoin and Ethereum firmly withstood the downward pressure and maintained a solid uptrend. This demonstrates that as the overheated debt accumulated in the futures market was cleared, strong spot market buying interest absorbed all the massive supply at the bottom, creating a defense wall. This can be viewed as a sign that the market’s underlying strength is significantly greater than before, going beyond a simple, temporary technical rebound.

Specifically, on the daily chart, both Bitcoin and Ethereum are exhibiting a breakout, pushing decisively past the upper boundary of the Bollinger Bands, which represents the range of price volatility. Extending volatility strongly to the upside after a prolonged period of consolidation is a classic signal for the start of a new uptrend. Along with the price breakout, trading volume has also notably exceeded its recent average, further increasing the reliability of this upward move. This can be interpreted as a phase where real spot-based buying enters the market, now that the futures market has been 'lightened' of its excess load.

Furthermore, various technical indicators showing trend direction and strength are unanimously pointing to strong bullish energy. Often, when buying energy reaches a maximum and enters overbought territory, there is concern about an imminent reversal. However, when the entire market enters a structural uptrend as it has now, overbought conditions often act as a sign of extended vitality for the rally. With major moving averages aligned in order from short-term to long-term, it is likely that the uptrend will not break easily and will maintain its momentum for the time being.

Future Strategy and Trend Invalidation Criteria

The strong breakout following the shower of large-scale liquidations proves that the crypto market has a solid foundation, but it also signals that we have entered an overbought zone where a short-term breather may occur. Indeed, in terms of the Relative Strength Index (RSI), which measures buying intensity, both Bitcoin and Ethereum are currently seeing excessive buying pressure in the short term. While the trend's strength is so robust that this overbought state often leads to further upside extension, it is rational to keep in mind the need for a 'speed-control' phase to verify support levels rather than rushing into impulsive trades.

The key benchmark for evaluating the stability of future market trends is the 20-day moving average, which represents the short-term trend. If Bitcoin falls below the price level it recently broke through and decisively closes below this 20-day moving average on a daily basis, the possibility increases that this rally was merely a temporary 'fakeout' and that the price will return into its previous trading range. Conversely, if it successfully tests and establishes support above this price level, we can seek a path for further gains in a much healthier environment, now that the excessive debt in the futures market has been cleared.

Finally, the variables to watch are the continuity of institutional funds flowing into spot ETFs and changes in actual spot market trading volume. The strong pillar that allowed the market to withstand the $1.7 billion liquidation shock was thanks to the influx of these genuine buying forces. Therefore, it is advisable for investors to set up phased response plans while calmly observing the maintenance of major support levels and spot supply-demand trends, rather than being swayed by short-term price volatility.