Bitcoin's Long Positions Surge, Price Stalls at $94,000, Long Squeeze Risk Looms

Bitcoin has recently experienced a significant surge in long positions, with the cryptocurrency's price rallying past $95,000. This price increase has led to a high demand for long positions among investors, who are anticipating further gains. In the last 24 hours, Bitcoin’s Funding Rate turned positive again, indicating that most investors expect the uptrend to continue and potentially reach the $100,000 mark.

However, the surge in demand for long positions could pose a problem as the price momentum weakens. The Open Interest for Bitcoin increased by $1 billion in 24 hours, rising from $31 billion to $32 billion, suggesting that more traders are entering the market to open new long positions. Despite this increase in Open Interest and funding rates, Bitcoin’s price has remained stuck around the $94,000 range for the past two days.

Additionally, Bitcoin’s spot cumulative volume delta has held firm within negative territory, currently sitting at -1094. This decline in the Spot CVD, coupled with the rise in Open Interest, indicates that buyers in the market are becoming weak. As long positions continue to increase, a drop in buying pressure leads to low demand, creating room for speculative investors to exit the market as they attempt to maximize profits.

Under these market conditions, there is a risk of a long squeeze. According to Alphractal, the ongoing market conditions may position Bitcoin to experience a long squeeze in the next few hours. This could result in a sharp drop on Bitcoin’s price chart and potentially risk a drop below $90,000, where long positions dominate.

The rising funding rate amidst weakening price buying momentum is a cause for alarm. If this trend continues, it could lead to a long squeeze with the price falling below $90,000. However, there are some signs of hope for the market, especially from short-term holders. 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.

With short-term 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, helping to reduce and avoid a potential downside spiral. Therefore, for the market to avoid a long squeeze, Bitcoin must reclaim $95,000 and attempt to reach $96,000.