As Bitcoin continues its upward climb, the leading cryptocurrency is once again flirting with the $120,000 mark, a level that has proven to be a formidable barrier in its pursuit of new all-time highs. Traders are now on edge, anticipating what could be a significant market movement driven by a potential short squeeze. This phenomenon occurs when bearish traders, who have bet against Bitcoin by shorting it, are forced to buy back their positions as prices rise, further fueling upward momentum.
Bitcoin’s Battle at $120K
The $120,000 level is not just a psychological milestone but also a critical technical threshold for Bitcoin. Over the past few days, Bitcoin has been steadily advancing towards this resistance point, sparking a tug-of-war between bullish and bearish traders. On one side, bearish traders have increased their short positions, hoping to capitalize on a pullback. On the other side, the possibility of a short squeeze looms large, with the potential to catapult prices even higher.
While Bitcoin’s price action has been relatively subdued compared to the dramatic spikes of the past, this steady approach might actually be beneficial for the broader crypto market. Historically, a consolidating Bitcoin has allowed capital to flow into altcoins, enabling them to shine in their own right.
Altcoin Market: Slow and Steady Gains
In contrast to Bitcoin’s cautious ascent, the altcoin market has been quietly making gains. Leading the charge are Ethereum (ETH), Solana (SOL), and XRP, each posting over 2% increases. Meanwhile, smaller market cap tokens such as ETHFI and CAKE have surged by 15% and 25%, respectively.
This resilience in altcoins can be attributed to Bitcoin’s consolidation phase, which often leads investors to diversify their holdings into more speculative ventures. However, not all altcoins are riding the wave. MYX Finance (MYX) has suffered a staggering 43% drop, largely due to the rapid unwinding of leveraged positions. Similarly, Plasma’s XPL token has faced its own challenges amid rumors of market manipulation, which the founding team has vehemently denied.
Derivatives Market Dynamics
The derivatives market paints a complex picture of Bitcoin’s current standing. Open interest in BTC futures is at an all-time high, surpassing $32 billion, indicating strong investor interest. However, there’s a notable divergence in funding rates across different platforms. Deribit’s funding rate is exceptionally high at 25%, suggesting a concentration of aggressive long positions, while other exchanges like Bybit maintain more neutral rates.
The options market, on the other hand, presents a more balanced outlook. The put-call volume ratio has slightly tilted towards calls at 52.25%, a decrease from previous bullish peaks. The 1-week 25 delta skew is nearly flat at 0.33%, reflecting a more measured sentiment as both puts and calls exhibit balanced implied volatility.
Liquidation Levels and Market Sentiment
Recent data from Coinglass highlights $380 million in liquidations over the past 24 hours, with a 35-65 split between longs and shorts. Binance’s liquidation heatmap pinpoints $121,300 as a critical level to watch. A price surge could trigger significant liquidations, potentially amplifying market movements.
This combination of metrics suggests the market is entering a phase of cautious optimism. After a period of strong bullish sentiment, traders seem to be adopting a more measured approach, weighing the potential for further gains against the risk of a pullback.
Looking Ahead
As Bitcoin continues to grapple with the $120,000 level, the broader crypto market remains on high alert. The potential for a short squeeze adds an element of unpredictability, which could drive significant price action in the coming days. While some traders are betting on a breakout, others remain wary of the resistance that has held firm thus far.
Ultimately, the coming days will test Bitcoin’s resilience and the market’s appetite for risk. Whether the current momentum can be sustained or if a correction is on the horizon remains to be seen. For now, traders and investors alike are keeping a close eye on the charts, ready to react to the next big move in the ever-dynamic world of cryptocurrency.
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
