- Bitcoin registered a hike in longs positions above $90k
- Cryptocurrency could see a long squeeze as demand soars while price momentum weakens on the charts
Over the past week, the market saw Bitcoin [BTC] rally past $95k. This price pump resulted in a high appetite among investors as they now expect further gains. Needless to say, the demand for long positions has skyrocketed too.
In fact, in the last 24 hours alone, Bitcoin’s Funding Rate turned positive again, with the longs being dominant above 90k.
Source: Alphractal
This means that most investors expect the uptrend to continue and possibly, hit the $100k-mark. However, the surge in demand for longs could become problematic as the price momentum weakens.
We can see this uptick as Bitcoin’s Open interest increased by $1 billion in 24 hours, rising from $31 billion to $32 billion. Often, when Open Interest rises, it means more traders are entering the market to open new positions. In this case, they are long positions.
While Open Interest and funding rates have risen lately, the crypto’s price has remained stuck around the $94k range for the past 2 days.
Source: CryptoQuant
Additionally, Bitcoin’s spot cumulative volume delta has held firm within negative territory. At the time of writing, the Spot CVD sat at -1094.
When the CVD declines as the Open Interest rises, it means that buyers in the market are becoming weak. All while longs continue to increase. A drop in buying pressure leads to low demand, thus creating room for speculative investors to exit the market as they attempt to maximize profits.
Source: Checkonchain
When the market is set like this, a risk of a long squeeze emerges. According to Alphractal, the ongoing market conditions may be positioning Bitcoin to experience a long squeeze in the next few hours. As per their analysis, there may be a moment of market anxiety. Especially as many traders start feeling optimistic and projecting higher prices, while bears grow anxious fearing a further price hike.
If the predicted long squeeze emerges, we could see a sharp drop on Bitcoin’s price chart. It could also risk a drop below $90k where longs dominate.
Is a long squeeze inevitable for BTC?
Notably, the rising funding rate amidst weakening price buying momentum is a cause for alarm. If the trend continues like it has, we could see a long squeeze with the price falling below $90k.
However, there may be some signs of hope for the market, especially from short-term holders. Consider this – The short-term holder realized profit/loss ratio climbed to +1.2%, marking a key psychological shift. Historically, flipping this ratio positive has signaled the start of a sustained recovery on the charts.
Source: CryptoQuant
Significantly, with STH holders in profit, they bring positivity to the market and could help stabilize the price.
When this cohort is in profit, selling pressure from them falls and by extension, helps reduce and avoid a potential downside spiral. Therefore, for the market to avoid a long squeeze, BTC must reclaim $95k and attempt $96k.
