Bitcoin Drops 1.3% After 10% Rally, On-Chain Data Suggests Potential Short Squeeze

Bitcoin has experienced a slight decline in price after reaching above $94,000 earlier in the week. At the time of writing, btc is trading at $92,775, marking a 1.3% decrease over the past 24 hours. This movement follows a multi-day rally where Bitcoin gained nearly 10% since the beginning of the week, raising questions about the sustainability of the recent momentum amidst broader market uncertainty.

While the price action has temporarily stalled, on-chain data and exchange behavior are providing clearer insights into Bitcoin’s short-term outlook. According to a new analysis from CryptoQuant contributor Novaque Research, investor behavior on Binance, one of the largest retail-focused crypto exchanges, may offer valuable insights into what comes next for BTC, particularly regarding liquidity conditions, positioning, and potential short-term price squeezes.

Novaque Research highlighted notable changes in exchange flow patterns that coincide with Bitcoin’s recent price behavior. Between April 6 and April 10, Bitcoin inflows into Binance exceeded 15,000 BTC. During this period, Bitcoin’s price hovered in the $85,000 to $87,000 range. The analysts interpret this as indicative of increased sell-side pressure, likely driven by short-term traders liquidating positions or preparing for tax-related obligations.

In contrast, between April 19 and April 23, Binance experienced over 15,000 BTC in outflows as the price moved above $93,000. This activity suggests a shift toward accumulation, with investors moving assets into self-custody—a trend often viewed as bullish since it implies reduced short-term selling risk. Supporting this view, the Exchange Reserve metric shows a declining trend since April 18, while the Exchange Whale Ratio fell below 0.3 on April 23, suggesting that large-volume traders are stepping back, and the market is becoming more influenced by retail behavior.

Alongside changes in exchange flows, Novaque Research notes that the structure of Bitcoin’s leveraged positions has also evolved. According to the analysis, leveraged long positions were largely flushed out in the $82,000 to $88,000 range, indicating that many short-term traders exited during the recent price swings. At the same time, short positions remain concentrated just above the $92,000 level, which could make them vulnerable to a short squeeze if the market gains further upward momentum.

The report concludes that market conditions are now more balanced, with fewer large players influencing price direction and thinner liquidity zones above current levels. The CryptoQuant contributor noted that with the market structure cleaned up and liquidity thin above present levels, any trigger may rapidly propel BTC above $98K-$100K. This analysis suggests that the current market dynamics could set the stage for a significant price movement in the near future, driven by reduced selling pressure and a potential short squeeze.