Key Points
- A trader has risked a $332 million position with a highly leveraged 40x short on Bitcoin.
- Despite weak demand, aggressive positioning in Bitcoin derivatives has caused Open Interest to surge by $2 billion in two days.
A high-stakes showdown is looming as Bitcoin edges closer to a potential crisis. A trader has taken a significant risk by placing a highly leveraged 40x short on Bitcoin, risking an entire $8.3 million account to open a $332 million position.
The short is currently sitting on an unrealized loss of $1.3 million, with a liquidation price set at $85,290. With Bitcoin trading near $83,245, the position is in a precarious state.
Market Reactions
If Bitcoin’s price increases, a short squeeze could fuel a breakout. Conversely, if the bears defend the resistance, a sharp pullback could follow. However, this battle is not expected to be easy.
The crossing of this range puts 699.2K BTC in focus as profit-taking pressure increases. A key group of stakeholders who bought BTC at a peak of $86,391 could be preparing to cash in.
For the bulls to take control, strong demand must absorb this sell-side liquidity. This is unlike Bitcoin’s drop to $78K, where 46k BTC flowed out, signaling strong spot demand. Its $84k price level saw no such capital influx.
The Bitcoin Derivatives Market
Despite the weak demand, Open Interest (OI) has surged by $2 billion in just two days, indicating aggressive positioning in Bitcoin derivatives. However, with the Taker Buy/Sell Ratio still below 1, sell-side liquidity continues to dominate in perpetual markets.
This suggests that traders are anticipating a potential reversal, with many positioning for profit-taking. If momentum weakens, a wave of OI liquidations or closures could amplify volatility in the coming days.
To trigger a short squeeze on the $332M short position and break the $85K–$86K resistance, strong spot and futures demand is required. However, with the taker buy/sell ratio still below 1, sell-side dominance signals bearish control.
If market conditions change, a short squeeze could drive Bitcoin higher. Otherwise, a pullback to $80K–$81K remains a strong possibility.
