Bitcoin’s Ongoing Rebound Risks Liquidating $6.51 Billion Short Positions

Bitcoin short-sellers’ hopes to push the cryptocurrency’s price below the crucial $60,000 mark have faltered this week. Instead, it has set the stage for a potential multi-billion dollar short liquidation wipeout that may push BTC price back toward $70,000. Let’s discuss these factors in detail.

A Potential Bitcoin Short Squeeze Ahead?

Data from Coinglass shows that the market will liquidate $6.51 billion worth of short positions if the BTC price crosses above $67,500 — a price level it has been trading below since June 13. Instead, these short-sellers are betting on a price decline below $54,500, which would trigger $3 billion worth of long liquidations.

Accompanying the liquidation data is a noticeable decline in Bitcoin’s open interest (OI), which represents the total value of all outstanding or unsettled Bitcoin futures contracts across exchanges. As of June 27, the Bitcoin Futures OI stood at around $17.52 billion, a significant drop from the $19.18 billion at the start of the month.

The declining OI suggests that weaker, more speculative positions are being weeded out. This process can stabilize the market and set the stage for more sustainable price movements driven by stronger hands.

Meanwhile, Bitcoin’s OI funding rate climbed to 0.0090% per eight hours on June 27 from its recent low of -0.0024% per eight hours on June 24. The rising funding rates have accompanied a 5% BTC price rebound in the same period after testing the $60,000 support.

A rising funding rate reflects higher demand for long positions. When long positions outnumber shorts significantly, it drives the funding rate up as longs pay shorts to maintain their positions. So, the funding rate flipping from negative to positive during Bitcoin’s rebound from $60,000 shows strong conviction among traders toward BTC’s upward potential.

Overall, the combination of falling OI and a rising funding rate is a classic bullish signal. It indicates that the market is shaking off weak hands, reducing speculative noise, and building a foundation for a more sustained upward movement.

In doing so, the market hints at an increasing likelihood of a short squeeze. If Bitcoin’s price rises, short-sellers may be forced to cover their positions, leading to rapid price appreciation.

Bitcoin On-Chain Metrics Hint “Great Buying Opportunity”

As of June 27, 76% of Bitcoin’s supply is in profit, a dip that typically signals “a great buying opportunity,” as noted by ElCryptoTavo, an on-chain data analyst at CryptoQuant.

For instance, in March, when 76% of Bitcoin transactions were in profit—as tracked by its unspent transaction output (UTXO) data, its price soared to an all-time high of around $74,000. The chart below highlights several similar instances, indicating a strong correlation between the UTXO and Bitcoin’s price surges.

Moreover, the total Bitcoin reserves held by all crypto exchanges has dropped to its lowest levels since 2022, indicating a higher holding sentiment among traders and investors alike.

In addition, Bitcoin exchange-traded funds are witnessing inflows after a long streak of outflows accompanying the recent price decline, further solidifying a growth scenario for BTC prices.

Bitcoin Technical Analysis: Rangebound Price Action Sets $70K Target

Bitcoin short-sellers sees liquidation risks further due to the cryptocurrency’s bullish technical outlook.

Recently, Bitcoin rebounded from a trendline support within a broader sideways channel. Since March, this support level—around $60,000—has consistently fueled Bitcoin’s upward momentum, propelling it toward $70,000.

Despite encountering some resistance from the 50-day exponential moving average (50-day EMA, shown as the red wave) near $65,575, Bitcoin’s bullish trajectory remains strong. In other words, Bitcoin’s ongoing rebound may take the price toward the $65,000-70,000 range next, effectively triggering short liquidations.