Bitcoin BTC is approaching a pivotal price zone that could put significant strain on short sellers, with derivatives indicators pointing to the early formation of a short squeeze and signs of a local bottom.
Data from Coinglass shows a concentration of large short positions—likely initiated on Binance during last week’s sharp drawdown—clustered around the $87,000 liquidation level. A move above that threshold could force these shorts to close out, converting into buy orders and amplifying upward momentum in a typical short-squeeze dynamic.
Market signals are increasingly aligned with this setup. The global average funding rate has turned negative at -0.006%, indicating that short positions now outnumber longs. According to Glassnode, such negative funding stretches often coincide with seller fatigue and have historically marked local market bottoms when they persist.
Leverage has also retreated meaningfully. Open interest climbed to around 752,000 BTC on Nov. 21 as Bitcoin fell toward $80,000, but has since dropped sharply to roughly 683,000 BTC. That figure is well below the roughly 741,000 BTC open interest seen on Oct. 10, just before the major liquidation cascade.
Taken together, the reset in leverage, renewed negative funding rates, and Bitcoin’s approach toward key short-liquidation levels suggest the market may be positioning for further recovery—assuming broader macroeconomic conditions remain supportive.
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