Key Points
- Bitcoin’s Open Interest (OI) heatmap shows a pattern of longs getting trapped as prices reverse after a surge in OI.
- Recent patterns suggest a possible short squeeze could push Bitcoin past $99K, targeting $100K.
Bitcoin [BTC] longs have been repeatedly trapped over the past month, according to the Open Interest (OI) Heatmap. This pattern shows that whenever buyers step in and OI spikes, prices reverse, leaving longs stuck.
Bitcoin Futures OI: A Key Resistance Zone
A month ago, Bitcoin was trading around $106K. Currently, it is hovering around $95,415, marking the second straight cycle of this loop. The 105K-106K range saw a surge in Open Interest as traders piled in, with over $68 billion in open positions. However, when Bitcoin revisited this “breakeven” zone, longs doubled down and got trapped as weak hands exited the cycle.
Additionally, futures traders increase high-risk leverage as Bitcoin hits a top, causing the leverage ratio to spike. This further traps longs and triggers more liquidations, turning the price range into a tough resistance zone.
Possibility of a Breakout
Recently, the 95K-98K range saw a huge surge in OI, surpassing $60 billion. But this time, it acted as support, trapping shorts as Bitcoin broke past $98K. Now, with Bitcoin hovering in this range, the big question is whether the pattern will repeat.
Could a short squeeze push Bitcoin past $99K, targeting $100K, before the futures market overheats with overleverage? With 52% of positions short and OI up by 1.50%, the market sets the stage for a powerful squeeze, trapping shorts and flipping the $99K-$100K range into a local bottom.
However, a drop in OI could be bullish, allowing Bitcoin to break past key resistance levels. If not, the cycle of trapping longs at every top could keep Bitcoin stuck in a loop. The next few days will be critical in determining this.
