Bitcoin Poised for ‘$80k Short Squeeze,’ Analysts Warn of Imminent Liquidity Crisis

BlockBeats News, May 25th, as the market bet on the easing of US-Iran tensions, Bitcoin rebounded from around $75,000. Traders began to anticipate Bitcoin's push towards $80,000 and triggering a significant amount of short liquidations.

Multiple traders stated that Bitcoin's previous drop below $75,000 seemed more like a "liquidity sweep," and the current market has returned to a short-term bullish trend. Analysis pointed out that a large number of high-leverage short positions are concentrated in the $80,000 to $80,500 range. If the price continues to rise, it may cause a new round of short squeeze.

Meanwhile, market expectations for a peaceful agreement between the US and Iran are rising. U.S. stock futures have already hit a historical high, while oil prices have retreated. Analysts believe that a reduction in geopolitical risks will benefit the overall recovery of risk assets, including the crypto market.

However, on-chain and fund flow data still show warning signals. On-chain analysis platform CryptoQuant pointed out that in the past 10 days, there has been a significant increase in net inflows of Bitcoin to Binance, with the reserve increasing by approximately 16,000 BTC in a month, usually seen as a signal of potential selling pressure increase.

In addition, the US spot Bitcoin ETF has seen continuous outflows recently, the Coinbase premium index has turned negative, indicating weakening demand from U.S. institutions. Meanwhile, leveraged long positions in the market continue to increase, and the funding rate remains positive.

Analysts warn that against the backdrop of "ETF outflows, weak spot demand, and crowded leveraged longs," Bitcoin currently appears more like a leverage-driven fragile rebound rather than a healthy bull market, with a potential future "large-scale liquidation event."