NOIDA (CoinChapter.com) — Bitcoin (BTC) faced a critical rejection at the $100,000 mark this week, with its price stuck in a holding pattern near $98,000 after hitting a multi-year high. The failed breakout triggered significant volatility.
Jacob King highlighted in a tweet that over $495 million was liquidated within 24 hours, marking the crypto sector’s largest liquidation event, amplifying fears of a potential long squeeze.
This has left the market vulnerable to heightened downside risks.
Liquidations and the Looming Risk of a Long Squeeze
Recent data highlights a troubling scenario for Bitcoin traders. Since November 23, liquidations have totaled nearly $144 million, with $98 million attributed to long positions and $46 million to shorts. These liquidations reflect overleveraged long traders who bet heavily on Bitcoin breaching $100,000.
The aggressive unwinding of long positions risks triggering a long squeeze. A long squeeze occurs when traders holding long positions are forced to sell their assets due to margin calls or stop-loss triggers. This amplifies selling pressure, creating a cascading effect that drives prices lower.
With Bitcoin’s funding rate in decline—signaling reduced demand for leveraged longs—the risk of such a scenario intensifies. Flattening open interest (OI) further suggests a lack of new capital entering the market, underscoring traders’ cautious outlook.
Additionally, Bitcoin’s inability to sustain bullish momentum has shaken market confidence. The charts illustrate a significant dip in OI-weighted funding rates, correlating with Bitcoin’s retracement from its highs. Historically, such conditions have preceded either extended consolidation or deeper corrections.
In conclusion, Bitcoin’s rejection at $100,000, declining funding rates, and elevated liquidation volumes increase the likelihood of a long squeeze. Traders should watch for further dips in OI and funding rates as signals of potential bearish continuation.
Bitcoin Price Action Losing Steam
The minuscule daily candle that the BTC USD pair has formed on Nov. 25 shows the declining excitement of market participants. The bullish cues driving Bitcoin prices, including the Trump election win and Gensler exit, seem to have been factored in by the market.
Bitcoin’s price could drop to support near $88,700 if the rally corrects. Moreover, breaching the immediate support might force BTC’s price to test support near $73,600.
On the other hand, a break above $100,000 could provide Bitcoin’s price the impetus to rally to the resistance near $110,500. Breaking and consolidating above the immediate resistance might help the token rally to the resistance near $126,000 before retreating. The consolidation phase could last until 2025 unless BTC finds some new cues to fuel its bull run.
The relative strength index for Bitcoin continued to be overbought, with a score of 78.19 on the daily charts. The overbought RSI levels add to the bearish cues against Bitcoin, strengthening the correction narrative.
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