Fear, uncertainty, and doubt (FUD) dominated the cryptocurrency market this week as volatility took over and most cryptocurrencies crashed. Bitcoin (BTC) has also suffered from this bearish sentiment, creating a scenario favoring an imminent short squeeze for the asset.
In particular, the derivatives market open interest (OI) in Bitcoin remains at all-time high levels, as previously reported. On June 15, Finbold retrieved updated data from CoinGlass showing a $34.5 billion OI with BTC at $66,224.
BTC Futures Open Interest (USD). Source: CoinGlass
The high speculative demand for opened long and short positions has crafted notable imbalances, which could favor short squeezes. This is because short-sellers leveraged trades created upward liquidity pools, especially at the $72,000 level, a key price resistance.
BTC Liquidation Heatmap. Source: CoinGlass
Short squeeze incoming? Bitcoin bullish divergence
Notably, the professional trader and analyst who goes by Credible Crypto has spotted other indicators suggesting a short squeeze. In a recent post on X, the analyst pointed to a bullish divergence with the cumulative volume delta (CVD).
BTC/USD and Bitcoin CVD. Source: Credible Crypto on X
In a comment, Credible Crypto explained that a down-trending CVD means there are more market sell orders than buys. Thus, the BTC price was expected to go down following the increased selling pressure, which is not happening. The trader believes this is a bullish indicator that buy orders are being consumed and a supply shock is imminent.
“CVD is not the same as volume- CVD measures the net difference between market buy and sell orders- so when it’s trending down it means there are more market sells than market buys. Typically this would cause price to drop, but when price isn’t dropping despite there being a lot of market selling…what does that tell us?”
— Credible CryptoNevertheless, technical analyses and awaiting liquidations are not conclusive evidence that a short squeeze will happen. The market’s state changes every second as cryptocurrency traders reevaluate their positions and change their exposures, market orders, and open interest—changing the likelihood of high-volatility events and shifting trends.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
