Analyst: Bitcoin Short Position Overly Crowded, Potential for Pre-Easter Short Squeeze

BlockBeats News, April 2nd. According to The Block, Bitcoin broke below $66,000, with a 3.7% decrease in 24 hours, remaining in the $60,000 to $70,000 range in recent weeks. Glassnode stated that spot demand is starting to absorb selling pressure but is not yet sufficient to drive sustained upward movement. An estimated 8 to 9 million BTC are held at a cost higher than the current price, creating a "resistance" suppressing rebounds, while long-term holders are still realizing losses at high levels, indicating that the phase of chip redistribution is not over.

On the derivatives side, the funding rate has remained negative for most of the first quarter, implying that traders holding short positions have been paying a premium. A Bitfinex analyst pointed out that "traders are willing to pay a premium to maintain short exposure," and if this concentration of shorts encounters upward momentum, it could trigger a short squeeze rally. Option market demand has also declined, with implied volatility contracting and skew slightly tilting towards downside protection, showing that investors are more inclined to hedge risks rather than bet on breakouts.

On a macro level, a Bitunix analyst stated that the market has entered a "supply chain disruption" phase, with energy and industrial metal production being impeded, initiating inflation transmission. Currently, Bitcoin's upper liquidity is concentrated between $69,000 and $70,100, with a key support test near $65,500. K33 noted that traders are entering the usually calmer Easter holiday window with a "cautiously aggressive" stance. Looking ahead, Pantera Capital founder Dan Morehead said in a recent podcast that Bitcoin may need another six to eight months to bottom out, but he also believes that Bitcoin has reached an "escape velocity," institutional involvement is still near zero, and the next bull run will be driven by broader adoption.