Traders are actively selling and taking profits after the buying wave of the Trump Trade stalled and Bitcoin failed to successfully break through $100,000. The long/short ratio on Monday (November 25) showed a bearish trend, and traders were heavily shorting Bitcoin. Analysts believe that Bitcoin may enter a consolidation phase, and the next rebound may occur in the second half of December.
The current long/short ratio is bearish, with traders heavily shorting Bitcoin. This imbalance comes with a warning: Excessive leverage in the derivatives market could trigger a sudden correction or even a long squeeze — a potential hidden catalyst for Bitcoin’s near-term reversal.
As of Tuesday's Asian session, according to CoinGlass data, in the past 24 hours, the total amount of cryptocurrency liquidations reached US$338 million, with long positions liquidating US$194 million and short positions liquidating US$144 million, and more than 129,000 people were liquidated.
The stark divergence highlights market volatility as “longs” – bets on rising prices – are forced to liquidate their positions after Bitcoin fell from an all-time high of $99,317 two days ago.
In simple terms, as Bitcoin experienced a small decline, traders exited their positions to minimize losses — a rational move given the high risk at current price levels. Short sellers seized on this opportunity, potentially triggering a cascade of long liquidations.
This is consistent with the current bull cycle, where despite Bitcoin's rapid rise, overheated speculation has been avoided due to the dominance of long positions. However, even a slight deviation from the bullish path provides an opportunity for shorts to exert pressure. The result? A long squeeze forces traders to close their positions, causing Bitcoin's price to plummet.
While a breakout above $100,000 is still possible, market volatility is becoming increasingly evident. As Bitcoin approaches a historic milestone, investors are adjusting their portfolios — either shifting their focus to other high-market-cap assets or cashing out on sizable gains.
If this trend continues, bears will likely take advantage of the resulting volatility and trigger a long squeeze every time Bitcoin hits a new high. This could keep Bitcoin stuck in a long-term cycle unless an external catalyst breaks the pattern and triggers a breakout.
Interestingly, over the past two days, whales have deposited approximately 10,000 bitcoins at a price of $98,121, totaling approximately $981 million.
The announcement by Bitcoin’s largest listed whale, MicroStrategy, at the beginning of the week was particularly significant. MicroStrategy CEO Michael Saylor wrote: “MicroStrategy has acquired 55,500 Bitcoins at a price of approximately $97,862 per Bitcoin for approximately $5.4 billion and has achieved a 35.2% quarter-to-date and 59.3% year-to-date return on Bitcoin.”
"As of November 24, 2024, we acquired $386,700 worth of bitcoin for approximately $21.9 billion, or approximately $56,761 per bitcoin," he continued.
However, every time Bitcoin gets close to that price target, a large number of holders, swing traders, or miners leave the market, creating the perfect environment for shorts to take over. This cycle keeps Bitcoin trapped in a continuous cycle, preventing it from climbing smoothly to historic milestones.
Should you enter the market when Bitcoin reaches $94,000, or is cash king?
It is not difficult to find that Wall Street institutions believe that Bitcoin is still bullish in the long term. Even if the price reaches more than $97,000, MicroStrategy insists on buying. But from the perspective of short-term trading, bulls seem to be hindered.
CryptoQuant analyst Percival said that round psychological barriers such as $100,000 are usually the point where traders exit their positions for "relative safety."
He stressed that since Bitcoin climbed from $73,000 to $99,800, it has recorded a gain of about 57%, ranking among the "top six exit rebounds in the consolidation zone." Nevertheless, the analyst believes that Bitcoin may enter a consolidation phase.
Percival stressed the importance of the Choppiness Index (CHOP), which is a measure of market momentum. According to him, the index shows that Bitcoin's rally is weakening on a weekly basis. This means that the cryptocurrency may consolidate for a few weeks before starting another rally.
The index's values range from 0 to 100, with values close to 100 indicating that the market is moving sideways (ranging) and values close to 0 indicating that the market is in a strong trend (bullish or bearish).
Analyzing previous market cycles, especially the one in 2020, he noted that Bitcoin's first post-consolidation correction lasted about three weeks, with a price drop of 18%. If history repeats itself, the next rally could occur in the second half of December.
The analyst also pointed out that the behavior of long-term holders (LTH) is a key factor in understanding the current market dynamics of Bitcoin. LTH is currently in a profit of 350% and is in the supply distribution stage with about 575,000 Bitcoins, worth about $58 billion.
Still, demand remains strong, helped by inflows into bitcoin spot ETFs and purchases by institutional players such as MicroStrategy.
Exploring further using the short-term holder (STH) realized profit and loss metric, Percival noted that short-term holders accounted for 30.2% of the profits recorded during this period.
Additionally, Bitcoin’s market capitalization to realized value (MVRV) ratio has surpassed 1.33, indicating that the average coin is approaching the 1.4 region, corresponding to 40% unrealized profits. Historically, this region coincides with the first correction after the sharp rally observed in late 2020.
Looking ahead, where Bitcoin moves may depend on a variety of factors, including the speed of its consolidation phase and the behavior of institutional and retail investors.
If the current consolidation period follows a similar pattern to previous cycles, Bitcoin could remain stable before attempting another push above $100,000. However, a short-term correction could still be in the cards as LTH continues to gain profits while STH remains active.
What will be the next trend of BTC price?
Just as the Bitcoin price fell below the key support level of $94,000, well-known cryptocurrency analyst CrediBULL Crypto recommended caution in establishing long positions in the asset. He said that the recent drop below $94,000 opened the door for $80,000, but it will not happen immediately.
Joe Consoti, another well-known Bitcoin analyst, said that since September 2023, the price of Bitcoin has closely followed the trend of the global M2 money supply with a lag of about 70 days. He warned that if this correlation continues, Bitcoin may face a sharp correction of 20-25% in the short term.
On the other hand, large companies continue to increase their holdings of BTC. On Monday, MicroStrategy purchased 55,000 Bitcoins, and Bernstein analysts raised their target price for MSTR stock to over $600. Similarly, Semler Scientific announced a new round of BTC purchases yesterday.
