Key Takeaways
Bitcoin’s rally has shorts on edge. About $14 billion worth are hanging by a thread if the price tags $125k. That kind of wipeout could trigger a massive short squeeze, forcing bears to buy back at higher prices.
Bitcoin’s [BTC] price climbed up to $122,190 on 11 August. However, it couldn’t hold its gains, ending the day down by 2.8%.
Since the breakout volume just wasn’t there, what we got was more of a hype pump than a real move. The result? A classic liquidity sweep, knocking out four chunky long clusters averaging $80 million each.
Now, Bitcoin shorts are piling back in. 70%+ short skew means bears are betting big on a pullback after the weak follow-through. But, what if bulls are actually baiting them for a classic short squeeze?
Heavy Bitcoin shorts set the stage for volatility
On the weekly charts, Bitcoin has been stuck just below the $122k all-time high for over 30 days – Caught in a tug-of-war between bulls and bears that’s keeping volatility tight.
The bias? Bitcoin shorts have been stacking heavy leverage, taking advantage of bulls failing to clear that $122k resistance.
Right now, there’s a massive $14 billion short cluster sitting around $125k. If BTC hits that level, shorts could get squeezed hard, forced to cover and dump a rush of buy orders into the market.
Source: Coinglass
Add the 70%+ short skew into the mix, and it’s clear Bitcoin shorts aren’t backing off. If BTC can hold its range and avoid a deeper long liquidity flush, that short cluster is only going to get heavier.
Why does this matter though? Well, Bitcoin has already taken three shots at the $122k supply wall since mid-July, each one failing as momentum faded. Breaking through will clearly need a more tactical, volume-backed push.
That’s where a mass short unwind comes in. If the squeeze triggers, the cascading buy pressure could be the jet fuel that finally sends Bitcoin ripping into price discovery.
BTC conviction collides with macro turbulence
Bitcoin’s move towards the $123k ceiling pushed over 99% of the circulating supply into profit. On 22 July, a similar profit saturation triggered roughly $3 billion in realized gains.
The result? A sharp reversal as aggressive Bitcoin shorts positioning drove BTC to $112k in under three weeks via liquidity sweeps and a shift to risk-off conditions.
This time, profit-taking has been muted. Realized gains totalled just $1.27 billion, despite “extreme” greed levels. This indicated that market participants remain in a hold bias, with FOMO outweighing distribution pressure.
Source: Glassnode
If that conviction holds, even with the Core CPI cooling the chances of a September rate cut, the $14 billion stacked in Bitcoin shorts could be the fuel that finally pushes BTC through the $122k ceiling.
