Autor Cointelegraph By Marcel Pechman

Key takeaways:Over-leveraged Bitcoin short positions between $63,000 and $66,000 have created a potential $2.6 billion squeeze trap for bears.Negative perpetual funding rates indicate that bulls have fully deleveraged, significantly reducing downside risk.The Bitcoin (BTC) crash to $61,100 on Friday wiped out $335 million in leveraged long positions. However, after a 21% decline in Bitcoin’s price, bulls might have set a perfect trap as negative market sentiment intensified. Bearish positions built up heavily between $63,000 and $66,000, setting the stage for a potential $2.6 billion short squeeze.Estimated cumulative Bitcoin liquidation at major exchanges, USD. Source: CoinGlassEstimated liquidations for a further 8% drop in Bitcoin to $57,000 from $62,000 stand at $1.2 billion. In contrast, a rally to $66,000 would put $2.6 billion of short positions at risk. This potential squeeze might provide enough fuel to revive buyer confidence following a record-breaking 13-day streak of net outflows from spot Bitcoin exchange-traded funds (ETFs).US-listed spot Bitcoin ETFs daily net flows, USD. Source: SoSoValueThe minor $3 million net inflow on Thursday could represent a temporary breathing room after 15 days of selling that drained $5.1 billion. It remains too early to conclude that momentum has officially flipped in favor of the bulls. Ultimately, if bears kept their leverage low and played conservatively, the actual threat of a massive short squeeze might be minimal.Bitcoin perpetual futures annualized funding rate. Source: LaevitasA neutral funding rate typically ranges between 6% and 12%, with longs paying to keep their positions open. The current negative 2% Bitcoin perpetual futures funding rate suggests growing confidence among bears. Thus, even if it takes time for Bitcoin to reclaim the $66,000 level, bulls have fully deleveraged, reducing downside risk.Nasdaq 100 futures (left) vs. Bitcoin/USD (right). Source: TradingViewBitcoin has severely underperformed the Nasdaq 100 index, but the tech sector is beginning to display weakness after Broadcom (AVGO US) closed down 12.6% Thursday, erasing $280 billion in market value. The company trimmed its AI chip sales forecast for the second half of 2026, putting investors on alert.Impact of the tech sector IPOs and Strategy’s 32 BTC saleOther prominent names in the AI sector also felt the impact. Micron (MU US) traded down 7.8% while Arm (ARM US) dropped 4.5%. With highly anticipated IPOs from SpaceX, Anthropic, and OpenAI in sight, investors likely opted to raise cash ahead of those offerings. Analysts claim this liquidity drain also contributed to Bitcoin’s recent weakness.Related: Strategy’s leveraged Bitcoin model has faced its first stress test–GrayscaleSource: X/dgt10011Jeff Park, partner at ParaFi Capital and Bitwise advisor, argues that the AI sector is draining money from other investments as the market becomes a “hot ball of money” that everyone suddenly “has to own”. However, Park reminds that once this period of AI mania blows off, capital will eventually rotate back to Bitcoin as its discounted valuation works in its favor.Regardless of whether Bitcoin’s weakness stems from AI sector hype, excessive confidence from bears poses a major risk once spot Bitcoin ETF inflows pick up or the fear surrounding a recent 32 BTC sale from Strategy (MSTR US) dissipates. A rally back to $66,000 might seem unlikely at first glance, but a sudden short squeeze could quickly shift momentum in favor of the bulls.

Key takeaways:Strategy faces tighter short-term liquidity, but its conservative 11% net leverage protects it from forced BTC liquidations.A Bitcoin rally above $70,000 remains unlikely as long as STRC trades under $100 and spot ETFs show net selling pressure.Bitcoin (BTC) faced a 21% price correction in 10 days, retesting the $61,000 level for the first time in 4 months. This movement coincided with Strategy (MSTR US) company’s decision to buy back some corporate debt, temporarily pausing its Bitcoin accumulation. Traders now fear that Strategy could be forced to liquidate some of its Bitcoin holdings.Strategy (MSTR US) Bitcoin reserve changes & average price. Source: StrategyStrategy had been the largest known Bitcoin buyer, accumulating 126,016 BTC for $9.31 billion since March. However, the company used $1.38 billion of cash raised by recent equity issuances to buy back some of its convertible debt. The decision, announced on May 15, coincided with the Stretch preferred stock (STRC US) distancing itself from $100.Strategy Series A Perpetual Stretch preferred stock (STRC US). Source: TradingViewThe STRC preferred stock allows Strategy to issue new shares whenever its price reaches $100 and offers holders a variable dividend, currently set at 11.5% annually, paid monthly in cash. If traders decide it is no longer worth $100, new buyers step in at lower levels, which is equivalent to demanding a higher dividend. So, at first sight, this should be a non-event for Strategy’s risk perception.Strategy raised $7.5 billion through preferred stock issuances in the first 5 months of 2026, which was highly supportive of Bitcoin’s price. Now, the company faces a rough path, given its cash position has been reduced to $900 million, which is enough to cover dividends for 6 months.Strategy (MSTR US) financial highlights. Source: StrategyStrategy’s 11% net leverage is the key financial metric to monitor, as it represents the amount of debt the company holds relative to its assets. By any standard, the coverage provided by its Bitcoin holdings–even at a $30,000 price–should be considered conservative.Will Strategy be forced to liquidate some of its Bitcoin holdings?While short-term liquidity conditions have certainly deteriorated, there is no contractual floor set in Strategy’s convertible debt that would force a Bitcoin reserve liquidation. Moreover, there is no prohibition on selling MSTR stock at a discount to its market-adjusted net asset value.If debt markets are not available, the company could opt to dilute current MSTR holders. Whether this move would be interpreted as a weakness and further pressure MSTR and STRC prices is irrelevant to Strategy’s leverage ratio, as the company would remain financially solid.Related: Saylor downplays Bitcoin slide as Strategy faces $11B paper lossSource: X/zeroxkyleAccording to X user zeroxkyle, author of the “Grand Line” newsletter, an eventual Bitcoin sale from Strategy would only bring its price down faster, worsening liquidity conditions. The analysis refers to a “doom loop” causing buyers to withhold from adding positions due to a constant fear of a large seller entering the market.It is impossible to predict what would ease investors’ tension, as Strategy is in no danger of an imminent forced sale. The preferred stock dividends can be paused at will, although they merely accumulate for later on. Still, as long as STRC continues to trade below $100 and spot exchange-traded funds (ETFs) remain a net seller, odds for a Bitcoin rally above $70,000 are slim.

Key takeaways:Bitcoin’s sharp 8% drop triggered $1.5 billion in forced liquidations, ending a tight two-month small-cap correlation.Worsening market sentiment was driven by $2.1 billion in Bitcoin ETF outflows and rising fears of a Federal Reserve interest rate hike.Bitcoin (BTC) faced a sharp 9% drop over 48 hours, hitting the $67,000 support for the first time in two months. This correction wiped out a substantial $176 billion from the total crypto market cap in just two days, triggering $1.5 billion in forced liquidations for overleveraged long positions. Traders remain uncertain about the drivers behind crypto’s underperformance, especially since US equities have shown notable strength.US Russell 2000 small cap equities index (left) vs. Bitcoin/USD. Source: TradingViewThe tight correlation between Bitcoin and US small-cap stocks officially broke on May 21 after a solid two-month run. Worsening market sentiment was likely fueled by $2.1 billion in net outflows from US-listed spot Bitcoin ETFs between May 12 and May 20, though derivatives data had already been hinting at a lack of institutional appetite.Bitcoin 2-month futures basis rate. Source: LaevitasThe annualized BTC futures premium relative to spot markets has held below the neutral 4% threshold for over three months, confirming weak demand for bullish leverage. Strategy’s Bitcoin accumulation pause and strength in AI investmentsStrategy (MSTR US), led by Michael Saylor, also sparked mixed reactions after it chose to buy back convertible debt while pausing its signature weekly Bitcoin purchases.Source: X/bjunjoX user ‘bjunjo’ said that Strategy entered “survival mode for their debt holders and shareholders,” putting aside the sole mission to accumulate more Bitcoin. According to the analysis, the company will do whatever it takes to meet its financial obligations, as shown by a recent BTC 32 sale. Jeff Dorman, Chief Investment Officer at Arca, called the move “a complete balance sheet mismanagement.”Source: X/ScroogeCapMeanwhile, X analyst ScroogeCap noted that Google’s (GOOG US) decision to raise equity rather than debt suggests that private equity is effectively dead as liquidity dries up. The analysis highlights that the Oracle (ORCL US) debt-to-equity ratio remains unusually high, while Meta (META US) might be forced to tap more capital due to “irrational spending.” Jim Bianco of Bianco Research reportedly said, “We have not seen the market this concentrated around a single theme in 150 years.” Additionally, JPMorgan research found that 41 AI-related stocks account for half of the S&P 500’s market value.Related: Bitcoin gets new $50K target after BTC price crashes 6% in a dayInterest rate target probabilities for the Sept. FOMC meeting. Source: CME GroupTraders became increasingly risk-averse as the war in Iran showed no sign of imminent relief, explaining the broader sell-off across cryptocurrency markets. US government bonds are now pricing in a 23% probability of the US Federal Reserve hiking interest rates by September, up from 0% just one month prior according to the CME FedWatch Tool.Ultimately, the cryptocurrency market crash on Tuesday reflects heavy outflows from spot Bitcoin ETFs, an extreme capital concentration in AI investments and a macroeconomic environment signaling stricter monetary policy for longer than the market had previously anticipated.

Key takeaways:Whale’s bullish positioning in the Bitcoin derivatives market is failing to counter the heavy spot selling pressure. The slight discount on USDT indicates capital is exiting to fiat, exposing the Bitcoin futures leverage risks.Bitcoin (BTC) dropped below $71,000 on Monday for the first time in seven weeks, liquidating $276 million in leveraged bullish positions as traders reduced their positions amid renewed military action between the US and Iran. Despite this heightened risk aversion, whales and market makers increased their bullish exposure in the Bitcoin derivatives markets.Bitcoin top traders’ long-to-short position at Binance & OKX. Source: CoinGlassAt Binance, the long-to-short ratio among top traders surged to 1.4x from 1.1x one week prior. These institutional players have gradually accumulated long positions since Bitcoin broke below $76,500 on Tuesday. Meanwhile, top traders at OKX initially expanded their short positions between Thursday and Sunday, but reversed course on Monday as their long-to-short ratio jumped to 1.9x.Bitcoin futures aggregate open interest at major exchanges, USD. Source: CoinGlassAggregate open interest for Bitcoin futures across major exchanges stood at $43.5 billion on Monday, remaining flat compared to the previous week. Despite the forced liquidations, traders did not rush to close their positions at a loss. Nonetheless, further analysis is required to determine whether bullish traders are relying excessively on leverage to sustain their current positions.Bitcoin perpetual futures annualized funding rate. Source: LaevitasThe annualized funding rate for Bitcoin perpetual futures jumped above the neutral 6% to 12% range for the first time in over six months. This data hints at growing confidence among bulls, but it also heightens the risk of cascading liquidations should Bitcoin’s price fall further. Nonetheless, a modest 13% funding rate remains far from signaling market desperation.Bitcoin spot ETF outflows contrast with AI bullsWhile the weakness in Bitcoin’s price can be partially attributed to rising oil prices, the tech-heavy Nasdaq Composite Index managed a 0.5% gain on Monday. Brent crude oil jumped to $95 per barrel after US officials stated that Iran had fired two ballistic missiles overnight. Additionally, Israel carried out a military incursion into southern Lebanon over the weekend.Investors’ intense focus on the AI sector has also contributed to capital outflows from the cryptocurrency market. On Monday, Anthropic, the developer of Claude AI, announced that it had confidentially filed its initial public offering (IPO) prospectus. Separately, Elon Musk’s SpaceX officially filed its own IPO prospectus.Related: Bitcoin dip buyers place $500M in bids as $70K retest loomsUSDT stablecoin / USD at major exchanges. Source: TradingView and CointelegraphTether’s USDT stablecoin traded at a slight 0.10% discount over the past week, signaling capital outflows into traditional fiat currency. This data aligns with the $3.46 billion in net outflows from US-listed spot Bitcoin ETFs since May 13. Ultimately, heavy selling pressure in spot markets is likely the driver behind Bitcoin’s recent price correction.It is still too early to claim that pro traders are flipping bullish based purely on the long-to-short ratio, especially following the recent spike in the perpetual futures funding rate. With no clear evidence that cryptocurrency market outflows are slowing, traders may remain skeptical of a sustainable short-term bull run, despite the relative strength in Bitcoin derivatives data.

Key takeaways:Bears gained a major edge ahead of Friday’s $9 billion options expiry, especially if Bitcoin price stays below $74,000.Spot Bitcoin ETF outflows and corporate BTC balance reductions fueled market pessimism.Bitcoin (BTC) retested the $72,500 level for the first time in six weeks on Thursday, triggering $342 million in liquidations for bullish leveraged positions. Despite a subsequent relief bounce to $73,500, traders are worried that bears will keep control due to the upcoming $9 billion monthly options expiry.May 29 Bitcoin call (buy) options open interest at Deribit, BTC. Source: DeribitDeribit holds a 70% market share for the May monthly options expiry, capturing $3.4 billion in open interest for calls (buy) and $2.91 billion for puts (sell). However, bulls were caught off guard when Bitcoin broke below $78,000 on May 17.If Bitcoin stays below $74,000 heading into Friday’s expiry, only $306 million worth of call options will remain in the money. In contrast, put options targeting $74,000 or higher total $1.05 billion, giving bearish strategies a massive advantage.May 29 Bitcoin put (sell) options open interest at Deribit, BTC. Source: DeribitEven if Bitcoin reclaims $74,000 by Friday, put options will still outpace call instruments by $265 million. On the bright side, there is no excessive demand for downside protection right now, as put options volume typically spikes only when traders anticipate severe negative surprises.Bitcoin options put-to-call volume ratio, USD. Source: LaevitasThe Bitcoin options put-to-call volume ratio stood at 0.8 on Thursday, reflecting $1.57 billion traded in calls versus $1.29 billion in puts. This neutral setup represents an improvement from the prior week, which was marked by heavy demand for defensive, neutral-to-bearish options strategies.Bitcoin only has an 18% chance of reaching $80,000 by June 26The June 26 expiry shows traders are generally uninspired by Bitcoin’s short-term price prospects.Deribit June 26 Bitcoin options pricing. Source: DeribitThe $80,000 June call option traded at 0.0103 BTC on Thursday, equivalent to $757. Given the 28 days remaining until expiry, the implied odds of Bitcoin trading above that level sit at 18%. This widespread pessimism can be partly attributed to the $1.07 billion in net outflows from US-listed spot Bitcoin ETFs over two days.Related: Bitcoin falls further as BTC miners pivot to AI, pro-crypto legislation stallsOn Thursday, Paris-based semiconductor developer Sequans Communications (SQNS) announced plans to fully liquidate its Bitcoin holdings, abandoning its previous accumulation strategy. Publicly traded mining firms, as well as Trump Media and Technology Group (DJT), have also recently scaled back their Bitcoin exposure.While it is impossible to predict whether a correction to $70,000 is the most probable scenario based solely on Bitcoin options flows and positioning, bears clearly hold the upper hand heading into the upcoming Friday expiry at 8:00 am UTC. Lingering fear and market uncertainty should prevail, significantly weakening the odds of any sustained bullish momentum in the short term.