A nail-biting situation is developing in the cryptocurrency market as a trader has placed a highly leveraged 40x short on Bitcoin, risking an entire $8.3 million account to open a $332 million position.
Critical Market Situation
At present, the short is experiencing an unrealized loss of $1.3 million, with a liquidation price established at $85,290. With Bitcoin’s current trading price close to $83,245, the position is precariously balanced.
Potential Outcomes
If Bitcoin’s price increases, a short squeeze could result in a breakout. Conversely, if the resistance is defended by bears, a sharp pullback might occur. This range highlights 699.2K BTC as the pressure to take profits increases, with significant stakeholders who purchased BTC at a peak of $86,391 potentially ready to cash in. For bulls to regain control, this sell-side liquidity must be met by robust demand.
Market Volatility
Despite weak demand, Open Interest (OI) increased 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 traders anticipate 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.
