Short Squeeze Incoming, Key Support for BTC Around $88K

Original Article Title: "Short Squeeze, BTC Key Support Near $88K"

Original Source: Bitpush News

On Tuesday, the cryptocurrency market continued its pullback.

According to Bitpush data, after reaching a high of $95,000 in the early morning, Bitcoin remained under pressure. In the afternoon, bulls attempted a rebound but encountered bearish resistance at $94,800, briefly dropping below $91,000. At the time of writing, the Bitcoin trading price was $91,646, with a 2% 24-hour decline. The altcoin market showed even weaker performance, with over 90% of tokens in the top 200 by market cap recording losses.

The total cryptocurrency market capitalization is currently $3.14 trillion, with Bitcoin dominance at 57.3%.

In the US stock market, the SP, Dow Jones, and Nasdaq indices all closed higher, gaining 0.57%, 0.28%, and 0.63%, respectively.

Possible Reason for the Decline: Leveraged Market Overheating

Part of the reason for Bitcoin's decline may be the presence of too many leveraged trades in the market. When there is volatility in the market, these leveraged trades are forced to liquidate, leading to further price declines.

Data analysis platform IntoTheBlock expressed a similar view, suggesting that Bitcoin's pullback "can be attributed to" the rise in funding rates, ultimately causing a bearish market sentiment. However, as funding rates return to a normal range, further leveraged liquidations should be limited.

Cryptocurrency futures market analyst Byzantine General pointed out that based on trading volume, Bitcoin's current price trend resembles some previous local tops. He stated, "At this point, Bitcoin is likely to experience a period of sideways consolidation. However, during this time, some other cryptocurrencies may perform well."

From a technical perspective, Bitcoin may retest the liquidity area near the psychological support level of around $90,000 and may even drop further to $85,000.

This is because Bitcoin rose very rapidly from November 6 to November 22 without significant imbalance between buying and selling. Such rapid price increases are often followed by pullbacks to balance supply and demand. Therefore, Bitcoin may retreat to previous support levels or even lower to digest the previous gains.

In addition, with the Relative Strength Index (RSI) dropping below 50 for the first time since November 6, it is expected that sellers will dominate the price action in the coming week, potentially leading to Bitcoin consolidating below $95,000 for a period of time.

Cryptocurrency research analyst CoinSeer believes that the key support below Bitcoin is in the $85,000-$88,000 range, and a breakdown below this level could trigger a large-scale cascading liquidation.

TradingView analyst TradingShot wrote: "Yesterday's sharp Bitcoin pullback caught the market off guard. There are several underlying reasons for this: firstly, the post-election excitement gradually fading, and secondly, the pressure from the psychological level of $100,000. However, there is a more important technical reason that has been overlooked."

The analyst points out: "As shown in the chart, there has been a Fibonacci channel in the past three cycles (including the current one). This channel started with a strong rebound from the top formed in December 2013. The top of that cycle coincided precisely with the 0.236 Fibonacci level of the cycle, a level that has acted as resistance to the uptrend in the bull markets of June 24, 2019, and May 11, 2024."

TradingShot states that the recent pullback is because Bitcoin touched the "first true resistance of the bull market cycle."

He explains: "This is the Fibonacci trendline that blocked the uptrend most recently (November 22). We can call it the 'first true resistance of the bull market cycle' because it is the first major resistance level that the bull market cycle encounters before the ultimate peak. In the past two cycles, the highs were at the 0.0 Fibonacci level, which is the top of the channel (red circles in the chart). The red dot at the end of 2025 is not a prediction but for comparison."

TradingShot also observes: "The duration of each bull market cycle in the past has been around 150 weeks (1050 days). If this pattern repeats, the peak could occur at the end of September or the beginning of October."

He points out: "Attempting to capture the peak and sell out is much better than giving an exact price. Equally interesting is that, despite BTC facing technical resistance, the current uptrend began from the low point of August 5, 2024, precisely on the 1-week MA50 (blue trendline). From a technical perspective, as long as this trendline remains valid, the cyclical bull market wave should be able to remain intact."

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