Rising political uncertainty in the United States appears to have fueled short-term risk-off positioning, amplifying volatility in the digital-asset market. On the 26th (local time), CryptoQuant contributor XWIN Research Japan said, "In prediction markets, the probability of a повтор U.S. government shutdown has risen to 78%, and the budget deadline is approaching on January 30, 2026. With bipartisan negotiations stalled, political risk is once again weighing on near-term market sentiment," the report said. Against this backdrop, Bitcoin (BTC) fell below the $87,000 level. During the decline, about $170 million in leveraged long positions were forcibly liquidated over roughly 60 minutes, and cumulative liquidations over a four-hour window reached around $320 million. Over a short period, the total cryptocurrency market capitalization fell by about $40 billion. Because the move occurred in a thin-liquidity zone, it was viewed less as broad-based spot selling and more as a derivatives-led deleveraging phase. Liquidations occur when an exchange forcibly closes positions after futures holdings fall below maintenance margin requirements. Leveraged long positions have primarily been used by short-term traders and hedging/arbitrage participants, and had accumulated on expectations of a 2026 upswing. When prices fall, forced closures hit the market as market orders, and if the order book is thin, declines can accelerate over a short period. A key indicator for interpreting this zone is open interest (OI). OI reflects the size of outstanding futures positions in the market and is used as a gauge of leverage. When OI declines alongside falling prices, it suggests price moves are being driven more by liquidations and position unwinds than by deteriorating fundamentals. Based on on-chain data, total OI currently stands at about $28.4 billion, significantly lower than the roughly $47.0 billion peak seen in late 2025. This indicates a substantial degree of deleveraging has already taken place. However, with OI stabilizing and edging up slightly in early 2026, there remains room for additional volatility during the correction. XWIN Research Japan said, "Ultimately, what matters in this downturn is not whether a specific price level breaks, but how the market responds afterward," adding, "Key points to watch next are whether selling pressure cools quickly after liquidations, whether spot demand absorbs supply, and whether leverage indicators normalize."
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