Bitcoin (BTC) Price: Short Squeeze Setup Emerges After $1.7 Billion Liquidation Wave

TLDR

• Bitcoin price dropped to $81,201 in the past 24 hours, its lowest level in over two months, with a 14.5% decline over 16 days
• Liquidations totaled $1.68 billion in the past day, with 93% coming from long positions and 270,000 traders affected
• Over $6.5 billion in short positions could face liquidation if Bitcoin moves toward $92,000, compared to only $1.2 billion at risk below $72,600
• Binance open interest increased 31% since October 2025, rising from 93,600 BTC to 123,500 BTC despite recent price drops
• U.S. spot Bitcoin ETFs saw $817 million in net withdrawals on Thursday, led by BlackRock’s IBIT with $318 million in outflows

Bitcoin dropped to $81,201 in the past 24 hours. This marks the cryptocurrency’s lowest level in over two months.

The price decline has pushed the Crypto Fear & Greed Index to 16, labeled as Extreme Fear. This represents the lowest rating recorded so far this year.

Over the past 16 days, Bitcoin has fallen 14.5%. The sustained selling pressure has dominated crypto markets during this period.

Liquidations reached $1.7 billion in the past 24 hours. Data from CoinGlass shows that 93% of these forced closures came from long positions.

About 270,000 traders saw their positions automatically closed. Liquidations occur when exchanges close leveraged positions that cannot meet margin requirements as prices move against traders.

U.S. spot Bitcoin ETFs recorded $817 million in net withdrawals on Thursday. BlackRock’s IBIT led the outflows with approximately $318 million pulled from the fund.

Fidelity’s FBTC lost around $168 million. Grayscale’s GBTC saw roughly $119 million exit based on figures from SoSoValue.

Futures Market Shows Rising Activity

Binance open interest has climbed to 123,500 BTC. This represents a 31% increase from the October 2025 low of 93,600 BTC.

The rise in open interest suggests traders are rebuilding exposure rather than fully exiting the market. This occurred despite the recent price weakness.

Monthly Bitcoin futures volume across all exchanges fell to approximately $1.09 trillion in January. This marks the lowest level since 2024.

Trading activity remained concentrated on major venues. Binance led with $378 billion, followed by OKX at $169 billion and Bybit near $156 billion.

Short Position Imbalance Creates Potential Rally Fuel

Bitcoin swept its swing lows between $80,000 and $83,000. This move cleared a cluster of long liquidations from the market.

CoinGlass data reveals over $6.5 billion in cumulative short positions at risk if Bitcoin moves toward $92,000. By contrast, a drop to $72,600 would only threaten about $1.2 billion.

This imbalance means upside moves may force short sellers to buy back positions. The buyback activity could potentially accelerate price recovery.

Crypto commentator MartyParty framed the recent move as part of a Wyckoff Accumulation “Spring.” In this pattern, price briefly dips below support to shake out weak hands before reversing.

The sweep below $83,000 may act as a final liquidity grab. This allows larger participants to buy discounted Bitcoin before a potential reversal.

Markets reacted to growing uncertainty over U.S. monetary policy leadership. President Donald Trump announced plans to reveal his choice to replace Federal Reserve Chair Jerome Powell on Friday morning.

Reports indicated the White House is preparing to nominate former Fed governor Kevin Warsh. Warsh is seen as someone who may advocate for a tighter stance on the Fed’s balance sheet and monetary policy direction.

Bitcoin last traded 4.5% lower at $83,080 by 09:26 ET on Friday. Financial markets showed broader risk-off positioning with the dollar strengthening and yields rising.

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