Bitcoin is under pressure in the derivatives market. The maximum open interest is approximately 272,500 contracts. Funding rates have dropped to almost zero. The price has fallen below 95,000, which is a clear situation and short selling is piling up.
There are two likely results from this behavior. Short sellers win and the price falls. Or spot buyers will retaliate and put pressure on them. Although there is a bearish mood at the moment, the underlying macro story is different.
What the chart tells us
As funds dwindled, traders took new short positions. The market structure has little volatility due to large liquidations and long periods of time. This indicates controlled short selling rather than panic selling. The trading zone between 92,000 and 95,000 serves as the battleground. This rebound could be a nice correction for overzealous short sellers.
macro factors
The world is full of liquidity. Japan has launched an economic stimulus package worth 17 trillion yen, more than previously expected. China accessed 800 billion yuan through reverse repos. The US ended its shutdown last week and is scheduled to suspend QT on December 1st. These measures create risky assets such as Bitcoin. There is a tendency to direct capital towards cryptocurrencies, especially during times when derivative leverage is higher than spot demand.
Short squeeze risk is real
History tells a clear story. Mid-2024 saw a 15% one-week gain with comparable open interest and funding structures. When spot buying came in, shorts were held in excess and squeezed out. If the price rises above $92,000 and spot purchases increase, Bitcoin could explode to over $100,000 in a short period of time.
Bitcoin is at a crossroads. Bears are building short positions based on increasing open interest and decreasing funds. Global liquidity is observed with bulls waiting for momentum. If the price is moving in the support zone and the funds are negative, a classic short squeeze can occur. The new direction level is $92,000-$95,000.
