TL;DR
- Open Interest (OI) is increasing despite the price drop, indicating high leverage.
- Spot Demand (CVD) is disintegrating, leaving the price vulnerable to liquidation flows.
- The market is primed for a massive liquidation or a violent 5% to 10% short squeeze.
It is not just a simple price correction; the current Bitcoin landscape presents a more complex picture. The pioneer cryptocurrency fell below the $92,000 barrier, but what is really happening in the market isn’t reflected in the chart candle, but in the background of derivatives. Bitcoin has entered a critical phase.
Statistics indicate that while the price falls, Open Interest (OI) continues to grow. This combination marks a breakdown dominated by derivatives, not by typical selling pressure driven by the spot market.
Instead of closing them, traders are opening more positions, mostly short. This injection of pure and aggressive leverage significantly increases risk and volatility, with futures traders betting on even greater declines.
In contrast, Bitcoin’s Cumulative Volume Delta (CVD), which measures net spot demand, is decreasing rapidly. That is, real buyers—those willing to pay fiat money for physical Bitcoin—are abandoning the market, at least for a while.
As a result, the price lacks a natural demand floor and becomes extremely sensitive to liquidation flows, creating the perfect conditions for an imminent explosion of volatility in Bitcoin.
The Traders’ Battlefield: Liquidation or Squeeze
What the market is experiencing now is a bearish movement driven by momentum and leverage, rather than fundamental selling pressure. This factor is crucial because it sets the conditions for two explosive outcomes with equal probability.
The first possibility is that the price continues its decline, which would trigger a massive long-side liquidation. The forced selling of these positions could sink Bitcoin toward the $80,000 range, unwinding leveraged positions accumulated in previous months.
However, the alternative is equally violent. A market with this much liquidation liquidity is a market overflowing with new shorts. If Bitcoin manages to stabilize momentarily or spot demand returns, every late short becomes a target. A dramatic reversal could trigger a violent short squeeze, causing the price to skyrocket.
It would not be surprising to see a 5% to 10% candle in a single move, driven not by a fundamental change in sentiment, but by the destruction of leveraged positions.
The current market is a traders’ battlefield, not an ecosystem driven by long-term convictions. BTC is dangerously unbalanced. The only question is which side of the liquidation lever will give way first, unleashing the volatility explosion in Bitcoin.
