The crypto market is currently on high alert as signs point to an imminent Bitcoin short squeeze amid a build-up in short positions and massive liquidity clusters.
Notably, these liquidity clusters rest between $97,000 and $100,000 as BTC continues its recovery push. For context, Bitcoin’s steady rally since April 21 indicates bullish momentum, yet bearish traders continue to fade the uptrend. However, this could be setting the stage for a potentially explosive run.
Bitcoin’s price action has been resilient, rising from the $85,000 range to reclaim $95,000, with the asset currently trading at approximately $94,735. This represents a monthly gain of 14.78%, with a weekly increase of nearly 8%.
Despite facing mild resistance at $95,000 today, the price remains above $94,000 amid underlying strength. Nonetheless, the presence of large short positions above $92,000 suggests vulnerability to a short squeeze if Bitcoin breaks above key resistance zones.
Exchange Data Reveals Bullish Signals
According to Novaque Research on CryptoQuant, an analysis of Binance shows a behavioral change among investors.
Particularly, between April 6 and 10, Binance saw BTC inflows exceeding 15,000 BTC. This period coincided with price stagnation around $85,000 to $87,000, showing selling pressure.
However, from April 19 to 23, the trend reversed. The market recorded outflows of more than 15,000 BTC, corresponding with a price climb to over $93,000. These outflows show bullish accumulation behavior, leading to a drop in selling pressure.
Supporting this, Bitcoin exchange reserves have been declining since April 18. The analysis suggested that this current condition creates a “cleaner” market environment, less vulnerable to large-volume dumps by whales.
Bitcoin Short Squeeze Looms
Novaque Research confirmed that with Bitcoin’s market structure appearing to reset after weak-handed longs were flushed between $82,000 and $88,000, remaining shorts above $92,000 are increasingly at risk. Notably, a spike to this level could trigger a short squeeze.
In addition, there is thin liquidity above current levels, and this makes the market highly sensitive to positive catalysts, such as ETF inflows or favorable macroeconomic events, that could rapidly drive Bitcoin past $100,000.
Further, Coinglass data reveals a massive concentration of liquidation leverage at major levels. The most prominent cluster lies around $97,755, with a liquidation leverage amounting to $207.71 million. A second major cluster exists at $99,876, totaling $193.18 million.
These levels are important because if Bitcoin approaches or surpasses them, massive short liquidations could be triggered, forcing bearish traders to buy back their positions, which would propel the price even higher, confirming a Bitcoin short squeeze.
Leverage Builds While Short Bias Dominates
Interestingly, Glassnode also supports the short squeeze narrative. They confirmed that open Interest in perpetual swaps has surged to 281,000 BTC, a 15.6% rise since last month. This spike implies growing leverage in the market, which increases the risk of sharp volatility through liquidations.
Open Interest in perpetual swaps has risen to 281K $BTC, up +15.6% since early March. This suggests a build-up of leverage in the market as prices rebound, increasing the potential for amplified volatility via liquidations and stop-outs. pic.twitter.com/3e0mOORqAT
— glassnode (@glassnode) April 25, 2025
Also, despite the rise in Open Interest, the average funding rate has turned negative, currently at -0.023%. For context, this trend highlights a growing tilt toward short positioning, increasing the risks of a short squeeze.
Furthermore, the 7-day moving average of long-side funding premiums has fallen to $88,000 per hour and continues to decline, indicating waning interest in long positions and confirming the dominance of a short bias. As a result, a Bitcoin short squeeze could emerge if BTC spikes further.
Meanwhile, analysts remain bullish on the uptrend. Trader Merlijn recently highlighted a bullish breakout from a flag pattern. He compared the current setup to past events that led Bitcoin into parabolic rallies. In his view, if history repeats, the next stop could be as high as $150,000.
BITCOIN BULL FLAG BREAKOUT
The last time this happened? $BTC went parabolic.
This time? $150K is on the radar.
The rocket is loading. Don’t miss liftoff. pic.twitter.com/qI7R1mkr13
— Merlijn The Trader (@MerlijnTrader) April 25, 2025
DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
