Bitcoin Enters ‘Disbelief Phase’ – Could Short Sellers Face The Next Squeeze?

The concentration of short positions following the crypto market crash and prolonged pessimism has led some crypto experts to suggest the possibility of an upcoming Bitcoin(BTC) short squeeze. Nevertheless, the crypto community is largely divided on the probability of a rally as the macro uncertainties continue to prevail. 

How is BTC Performing Now?

The BTC is currently trading around $107,846.24; the price of the world’s largest cryptocurrency has decreased by around 3% in the past week. Overall, the token had a turbulent run this month, with the price briefly touching an all-time high of $126K and further dropping to $1,05,875.80 following a record market crash fueled by the rekindling of geopolitical tensions between the U.S and China. 

The crypto market continues to be in a sluggish state, with flagship tokens briefly recovering yet not showing signs of a stronger rally. The overall market sentiment remains bearish. The BTC is selling below the 10-day exponential and simple moving average. But current gloom and doom may not reflect the whole picture or what’s in store in the upcoming days. According to crypto expert Darkfost, BTC may have already entered a disbelief phase. The disbelief phase is when the investors are stuck in a pessimistic stance following a market crash. The earlier crypto crash, which wiped out $19 billion of leveraged positions, has led to prolonged market skepticism and the opening up of more short positions. 

What Does the Historical Data Say About BTC Short Squeeze Prediction?

The overwhelmingly high short positions often lead to a short-squeeze phenomenon in which the prices surge and short sellers are forced to buy back. Historically, BTC short squeezes happened when the funding rates reported negative, the short positions concentrated, and changes in market sentiments. Currently, the BTC is negative, and there is a concentration of short positions amid the mounting selling pressure that followed the market crash this month.

According to legacy data,  BTC short squeezes occurred back in January 2021 and in early 2024. The precedents for a short squeeze are generally a combination of strong institutional activity and retail investor enthusiasm. In the present scenario, despite some experts claiming that a short squeeze is around the corner, it is worth noting that the current market scenario remains highly volatile amid the ongoing macro pressure created by political and economic conditions. 

Is a BTC Short Squeeze on the Horizon Amid the Heightened Macro Uncertainties?

As the world’s largest cryptocurrency, the fundamentals of BTC remain solid. Nonetheless, the current crypto scenario remains grim. The BTC ETFs have recorded 40.40 million net outflow on October 20. Moreover, the macro pressure still lingers amid the ongoing U.S government shutdown, and the temporary pause on more than 100% tariffs on China is set to expire in November. Additionally, the overall crypto market is having a slump, with the market cap touching 3.66 trillion, reflecting a decrease in investor confidence in highly volatile markets such as cryptocurrencies, weakening the possibility of a rally. Besides, with the near inflation data release, investors are recommended to remain cautious.