[DigitalToday reporter Yoonseo Lee (이윤서)] Bitcoin rose to $78,000 in intraday trading on May 26 (local time) before sliding quickly, extending a market driven by short-term liquidity liquidations.

According to blockchain outlet Cointelegraph, bitcoin showed sharp volatility that shook long and short positions at the same time, while failing to follow the upward move in U.S. stocks.

Based on TradingView data, the bitcoin-dollar exchange rate hit $78,000 around the time Wall Street opened that day. That was the highest level since last Thursday. The gain did not last long. It then fell sharply, liquidating both long and short positions. CoinGlass data showed bitcoin liquidations of $66 million over the past 24 hours. That meant positions on both the upside and downside were cleared.

Middle East risk was behind the volatility. U.S. air strikes on Iran raised fresh doubts about recently floated attempts at a peace deal, shaking risk assets broadly. International oil prices approached $95 a barrel for U.S. West Texas Intermediate crude. U.S. stocks, however, shrugged off the worries relatively quickly and set new record highs again. Bitcoin showed a different pattern even within the same risk-asset category.

The market assessment was that bitcoin's price is currently driven more by moves targeting liquidity zones than by direction. Analytics firm Material Indicators saw bitcoin's price action as still being driven by liquidation hunting. It also said large investors were not turning bullish in response to changes in the macro environment, but were making "swing trades" within a short time-frame range.

Key technical zones also came back into focus in the process. Material Indicators mentioned that bitcoin's 21-week simple moving average is at $75,800. Trader Dan Crypto Trades saw the largest liquidity concentration zone below the current price at $74,000. That left open the possibility that lower liquidity could be absorbed even if there is a short-term rebound.

An increase in bullish positions was also cited as a variable. On-chain analytics firm Glassnode said bitcoin futures funding rates rose and clearly shifted into positive territory from a previous negative range. Glassnode said the change was a sharp reversal from the heavy short-biased positioning seen in April. It means long demand has increased, but if bullish positions become one-sided, the risk of further liquidations could also grow.

Actual trading appetite was not strong, however. K33 Research assessed that bitcoin has effectively moved sideways over the past week and activity across the broader cryptocurrency market remains sluggish. Vetle Lunde, head of research, said weekly spot trading volume is nearing annual lows, derivatives trading is falling across the Chicago Mercantile Exchange and overseas exchanges, and open interest is generally stagnant.

As a result, the market's focus is shifting from short-term spikes and drops themselves to the price levels where liquidity builds again and is unwound. With Middle East developments, oil prices and whether U.S. stocks can sustain their strength remaining external variables, bitcoin is increasingly likely to continue a liquidation-driven, volatile market amid thin trading for the time being.

$BTC When zooming out, the biggest liquidity clusters in this area sit at $83K and $74K. pic.twitter.com/b5KotdQWrq