Mounting Bitcoin shorts could trigger $90K liquidation-fueled comeback rally
As BTC tumbled toward $81,000, short positions accumulated rapidly, creating the conditions for a potential liquidation-driven bounce that could push prices back beyond $90,000.
Over the last 16 days, Bitcoin's (BTC) valuation has declined by 14.5%, causing the Crypto Fear & Greed Index to plummet to 16 (Extreme Fear), marking its weakest reading so far this year.
Despite the fact that selling pressure has been the prevailing force across markets throughout the last two weeks, data from Bitcoin derivatives markets indicates that current trader positioning could pave the way for a comeback. Market observers are currently evaluating whether this recent downturn has set the stage for a relief bounce.
Key takeaways:
- Open interest on Binance has surged more than 30% from the lows observed in October 2025, signaling increased participation in the Bitcoin futures marketplace.
- Should prices advance toward $92,000, more than $6.5 billion worth of short positions could face liquidation risks.
Positioning asymmetry creates opportunity for relief bounce
Looking at the technical picture, BTC has reached and cleared its swing lows in the $80,000 to $83,000 range, eliminating a substantial concentration of long position liquidations. Now that this downside liquidity has been absorbed, focus is turning toward higher price levels.
According to CoinGlass data, should Bitcoin push toward $92,000, the cumulative value of short positions vulnerable to liquidation could exceed $6.5 billion. In stark contrast, a decline to $72,600 would only expose approximately $1.2 billion to liquidation risk. This asymmetrical distribution indicates that upward price movements could compel short sellers to cover their positions through buying, which may amplify any price recovery.
Furthermore, crypto market commentator Marty Party characterized the recent price action as resembling a Wyckoff Accumulation "Spring," a pattern where prices momentarily fall beneath a support level to eliminate weak holders before bouncing back.
Within this framework, the dip below $83,000 could represent a final sweep for liquidity, enabling institutional players to accumulate Bitcoin at reduced prices. Should this be followed by consistent buying pressure, the subsequent phase could feature a price surge with potential targets reaching back toward $100,000.
Futures market positioning reveals conflicting indicators
The recent Bitcoin downturn resulted in approximately $800 billion worth of liquidations within the previous 24 hours, representing the most significant single-day liquidation event since late November 20, during which BTC similarly traded around $81,000.
However, crypto analyst Darkfost notes that open interest on Binance has climbed to 123,500 BTC, surpassing the levels observed before October 10, 2025, when open interest had dropped to 93,600 BTC. This approximately 31% expansion since that time indicates that traders are reestablishing their positions instead of completely withdrawing from the market.
Meanwhile, overall derivatives market activity has experienced a slowdown. Monthly trading volume for Bitcoin futures across all platforms declined to approximately $1.09 trillion in January, representing the weakest level recorded since 2024. Activity remained primarily concentrated on leading exchanges, with Binance commanding $378 billion in volume, trailed by OKX at $169 billion and Bybit approaching $156 billion.