Overleveraged Bitcoin shorts create $2.6B squeeze risk

Bitcoin’s slide to $61,100 wiped out $335 million in leveraged long positions after a 21% drop, yet bears piled on short exposure between $63,000 and $66,000. That concentration of bets has left a potential $2.6 billion short-squeeze trap should prices rebound into that range.

Models show an 8% further decline to $57,000 from $62,000 would threaten about $1.2 billion in liquidations, while a move back to $66,000 would endanger $2.6 billion of short positions. Spot Bitcoin ETFs have seen a record 13-day streak of net outflows that drained $5.1 billion, and a $3 million net inflow on Thursday may only offer temporary respite.

The perpetual futures funding rate is currently negative 2%, a sign that bulls have largely deleveraged and downside risk has eased compared with a neutral 6–12% range where longs pay to hold positions. That dynamic means a recovery could unfold with less drag from leveraged longs.

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