Key Points
- Bitcoin’s recent surge led to a significant short squeeze, causing substantial liquidations.
- The crypto market remains volatile with potential for corrections.
Bitcoin’s recent surge has led to a significant short squeeze, causing substantial liquidations. The market continues to be volatile, and investors should be prepared for potential corrections.
A Green Crypto Market and its Effects
A green crypto market usually spells trouble for short-sellers. Bitcoin’s dramatic return to the $100k milestone was no exception. In a move that wiped out $970 million in leveraged positions, bearish bets were forcefully liquidated. Traders positioned against the rally found themselves caught in a textbook short squeeze. This resulted in a bullish stampede that left the bears bruised and the crypto market basking in green glory.
On the 2nd of May, Bitcoin wicked through the $98k ceiling, teasing a breakout. However, the follow-through was anything but convincing. Without a strong spot bid, bulls lost momentum fast. Bears smelled blood. With shorts stacking up to 63.64% dominance in BTC/USDT perps on Binance, the setup was ripe.
Liquidity Squeezes and the Future of Bitcoin
Despite Bitcoin’s surge back to $104k in a quick intra-day move, Bitcoin’s Open Interest (OI) has dropped around 4.30%, now resting at $63.70 billion. This suggests that Futures traders are already hitting the exit button, unwinding leverage and cashing out as the hype fades.
However, there’s no solid sign of spot distribution yet. On-chain flows suggest HODLers are holding the line, eyeing higher targets. This wave of derivatives-driven sell-side pressure might just get absorbed like a dip on a bull’s radar.
If Bitcoin continues slicing through supply walls, the setup is ripe for another punishing short squeeze. Liquidity maps highlight a dense cluster around $103,685, with $49.64 million in stacked leveraged positions. If bears get too comfortable, bulls might just spring the trap and rocket Bitcoin toward $105k.
