Derivatives data indicates overcrowded short positions, raising potential for a short squeeze despite bitcoin’s recent decline.
Bitcoin fell 5% to $58,000 in early U.S. trading Thursday, marking its lowest level since 2024. The drop extended losses in a broader crypto selloff, with Ether (ETH) declining 5.5% to $1,550.
The decline coincided with weakness in mega-cap tech stocks, pushing the Nasdaq down 0.4%. Markets reacted to the Federal Reserve’s hawkish pivot last week, signaling a potential rate hike sooner than expected.
Derivatives markets suggest short positioning is overcrowded, with stronger buy orders below current levels. This dynamic could trigger a short squeeze, though bitcoin remains in a downtrend.