Short Overheating Signal? Can Bitcoin Hold $62,000?

▲ Bitcoin (BTC) decline / ChatGPT-generated image ©

As Bitcoin (BTC) repeatedly fails to reclaim the $70,000 level, analysts suggest that excessive concentration of short positions in the futures market could instead spark a rebound.

According to CoinMarketCap on Feb. 13 (local time), Bitcoin fell to an intraday low of $65,092 before rebounding to $68,339, and was trading at $66,493 at the time of writing. It declined 1.7% on a daily basis, with volatility increasing. Notably, bearish bets remain pronounced in the derivatives market.

Data from CryptoQuant shows that Bitcoin’s perpetual futures funding rate dropped to -0.006. Under this structure, short position holders pay fees to long position holders, indicating that the broader market is leaning toward downside expectations. The Long/Short Ratio has remained below 1 for four consecutive trading days, currently standing at around 0.98, meaning more capital is flowing into sell positions. The Taker Buy/Sell Ratio has also stayed below 1 for four straight days, hovering near 0.9.

However, crypto-focused outlet AMB Crypto noted that if funding rates remain in negative territory for an extended period, it could signal conditions typically seen near market bottoms. When short positions become overcrowded, even a modest rebound can trigger a short squeeze, driven by forced buying to cover short positions.

Technical indicators still point to prevailing downward pressure. The Moving Average Convergence Divergence (MACD) remains in negative territory, and the Parabolic SAR indicator is positioned above the price, suggesting that the bearish trend continues. In the near term, $71,000 is identified as a key resistance level, while $62,383 is presented as a crucial support zone. If selling intensifies, a renewed drop below $65,000 is also being discussed.

Ultimately, the current structure reflects a combination of bearish sentiment in the derivatives market and a technical downtrend. However, the excessive buildup of short positions introduces another variable that could amplify volatility. Market attention is focused on whether Bitcoin will defend the $62,383 support level or pivot higher through a rebound accompanied by a short squeeze.

Disclaimer: This article is provided for investment reference purposes only, and we are not responsible for any investment losses incurred based on this information. The content should be interpreted solely for informational purposes.