Bitcoin News Today: Market Makers Build Liquidity Trap in Bitcoin's Range-Bound Consolidation Ahead of Breakout

Bitcoin’s recent price action has drawn attention to a strategic compression phase, with market makers appearing to defend range highs to set the stage for a potential liquidity trap before a breakout. Analysts suggest this pattern mirrors prior setups that preceded significant short squeezes, such as Bitcoin’s surge to $123,000 earlier this year. Market participants are closely monitoring key technical indicators, including declining funding rates and a shift to negative readings in the Premium metric, which signal a flush of late long positions from the market [1]. Open interest also surged during a recent fake breakdown, only to begin reversing as short positions face mounting pressure, hinting at a possible continuation move [2].

According to market analyst Luca, the current structure aligns with historical patterns where range-bound consolidation precedes directional moves. He notes that market makers are deliberately defending resistance levels to attract bears and trap weak hands, a tactic designed to build liquidity for an eventual upward push. “This compression phase is meant to create complacency for bears before a bigger move,” Luca stated in a recent analysis [1]. The tactic has been observed in previous cycles, particularly from late May to late June 2025, which preceded Bitcoin’s rally to record highs.

Technical data reinforces the buildup of a liquidity trap. Funding rates—key metrics for perpetual futures markets—have fallen, reflecting reduced bullish sentiment among late buyers. Simultaneously, the Premium metric’s negative trend underscores a weakening of long positions, creating conditions favorable for a squeeze [1]. Additionally, a spike in open interest during the recent false breakdown has begun to unwind, with short positions showing signs of distress. This dynamic suggests that market makers are accumulating liquidity at critical resistance levels, potentially priming the market for an upward breakout [2].

Broader market analysis highlights Bitcoin’s oscillation within a $115,000–$120,000 range over the past 10 days, with liquidity clustering near the $120,000 threshold. Traders warn that a false upward breakout could lure buyers into a trap before a retracement, as seen in prior cycles. Mitrade noted that while Bitcoin’s compression phase aligns with historical trends, the absence of clear volume spikes or on-chain divergences complicates timing predictions. A TradingView analysis further emphasized the $120,000 level as a “liquidity magnet,” cautioning against overreliance on technical signals in low-liquidity environments [2].

The debate among traders centers on whether the current phase will resolve into a breakout or a breakdown. A sustained close above $120,000 could invalidate the bearish case, while a drop below $115,000 risks a deeper correction. Large open interest near $120,000 heightens the likelihood of volatility in either direction. BBVA analyst Michalis Onisiforou added that Bitcoin’s valuation near the lower end of its 10-year range introduces an asymmetric risk-reward profile, though macroeconomic catalysts remain critical for sustaining a bullish trajectory [4].

Market participants are advised to monitor on-chain flow data and exchange-volume trends to distinguish genuine breakouts from deceptive price action. The absence of institutional buying signals or a meaningful increase in spot market participation underscores the fragility of the current equilibrium. For now, the market remains in a waiting game, with liquidity clusters and order-book depth acting as both barriers and catalysts for Bitcoin’s next move [2].

Source:

[1] [Bitcoin Compression Phase Signals Liquidity Trap Before Potential Upside Breakout](https://cryptofrontnews.com/bitcoin-compression-phase-signals-liquidity-trap-before-potential-upside-breakout/)

[2] [Bitcoin LTHs Start Distributing: CDD Ratio Hits Historic ...](https://www.mitrade.com/insights/news/live-news/article-3-985358-20250725)

[4] [Michalis Onisiforou](https://www.bbvamarketstrategy.com/author/michalis-onisiforou/)