Bitcoin News Today: Bitcoin's $15B Short Squeeze Risk Looms as $120K Threshold Nears Critical Level

Bitcoin faces a potential $15 billion short squeeze as leveraged bearish positions on major exchanges reach critical thresholds, according to data from CoinGlass retrieved on July 25. The cryptocurrency, currently trading near $116,738, has $14.69 billion in short exposure concentrated on platforms like Binance, Bybit, and OKX. Liquidation heatmaps reveal a dense cluster of leveraged buy orders above $120,000, suggesting that a breakout above this level could trigger cascading liquidations and forced covering of short positions [1].

The mechanics of a short squeeze are evident in the rising green curve on CoinGlass’ liquidity map, which highlights the concentration of short liquidation leverage near $120,000. Traders with positions in this zone risk automatic closure if Bitcoin’s price accelerates upward, triggering a feedback loop where short sellers must purchase BTC to offset losses. This dynamic, observed during past short squeezes in 2020 and 2021, could amplify upward momentum through increased buying pressure [1].

Analysts note the current scenario differs from speculative bubbles due to three key factors. First, Bitcoin’s valuation aligns with historical halving cycles, as indicated by the "rainbow" chart placing the price in a "moderately high valuation" green band rather than overbought red zones seen in 2017 and 2021 [1]. Second, major altcoins like Ethereum (down 25% from its 2021 high) and Solana (32% below its 2021 peak) have not regained record levels, signaling limited euphoric sentiment. Third, institutional adoption remains nascent, with corporate Bitcoin holdings totaling just $87 billion (3.2% of total supply), far below allocation levels during prior speculative frenzies [1].

While the $15 billion in short exposure underscores market volatility, macroeconomic factors such as U.S. Federal Reserve policy decisions continue to influence Bitcoin’s trajectory. Recent dips below $116,000 highlight sensitivity to central bank signals, which could either stabilize or exacerbate short-term fluctuations [2]. Investors are advised to monitor both technical indicators—particularly the $120,000 psychological barrier—and broader economic developments as the market navigates this pivotal phase.

Sources:

[1] [Monster $15 Billion Bitcoin Short Squeeze Alert] (https://finbold.com/monster-15-billion-bitcoin-short-squeeze-alert/)

[2] [Bitcoin Price Today: Drops Below $116K Ahead of Fed Meet] (https://uk.investing.com/news/cryptocurrency-news/bitcoin-price-today-drops-below-116k-ahead-of-fed-meet-crypto-policy-report-4184554)