Bitcoin, If It Exceeds $80,000, $1.4 Billion Evaporates?...Short Squeeze Fear Spreads

▲ Bitcoin (BTC), Short Position/ChatGPT Generated Image

Bitcoin (BTC) is on the verge of reaching the $80,000 mark, threatening large-scale bearish bettors and increasing the possibility of a record-breaking short squeeze.

Crypto media outlet Cointelegraph reported on April 28 (local time) that if Bitcoin's price reaches $80,000, leveraged short positions worth approximately $1.4 billion are at risk of forced liquidation. According to data from on-chain data analysis firm CoinGlass, a significant amount of bearish bets has formed around the $80,000 mark in the last 48 hours. Bulls are looking for an opportunity to pressure these bettors and drive up the price, leveraging changes in the Federal Reserve's (Fed) monetary policy and inflation concerns.

Indicators in the futures market suggest that bearish forces may have fallen into a trap. Over the past two weeks, Bitcoin perpetual futures funding rates have mostly been negative, indicating widespread conviction in a decline. However, as the price rebounded from $72,000 to $78,000, a significant number of bearish betting positions entered a loss zone. If the price breaks through the $80,000 resistance level, a cascade of forced liquidations of bearish betting positions is expected to occur, leading to a short squeeze that further accelerates price increases.

The macroeconomic environment is also becoming favorable for bulls. With Brent crude oil prices recovering to $100 per barrel, stimulating inflation expectations, the probability of the Fed adopting an accommodative policy has increased. According to the Chicago Mercantile Exchange (CME) FedWatch tool, the likelihood of a rate cut in September has risen to 20%. As the attractiveness of Treasury yields declines, funds are shifting to risk assets like Bitcoin.

Strong buying pressure in the spot market is firmly supporting Bitcoin's price floor. Strategy acquired an additional $255 million worth of Bitcoin between April 20 and 26, and US Bitcoin spot ETFs also saw a net inflow of $824 million during the week. Despite the price failing to break above $79,000, spot buyers are undeterred and continue to accumulate.

The sentiment in the options market remains cautious. Deribit's Bitcoin options delta skew recorded 11%, indicating higher costs for downside protection. This is evidence that whale investors and market makers are wary of downside risks. However, if spot demand continues and the Fed's policy stance becomes flexible, the current downside caution could ironically act as a powerful bull trap, leading to a strong rally.

Whether Bitcoin can break through the strong resistance wall of $80,000 is the market's biggest concern this week. Robust demand in the spot market and liquidation pressure from short positions in the futures market are converging, preparing for a liquidity squeeze. If the forced liquidation of bearish forces acts as a catalyst, Bitcoin's price could surge to levels beyond market expectations.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*