Bitcoin (BTC) Faces Critical Rejection at $100,000 Mark, Largest Liquidation Event in Crypto Sector Amplifies Fears of a Long Squeeze

Bitcoin (BTC) faced a critical rejection at the $100,000 mark this week, with its price stuck in a holding pattern near $98,000

Bitcoin (BTC) price action faced a critical rejection at the $100,000 mark this week, leaving its price stuck in a holding pattern in the sub-$98,000 after hitting a multi-year high. The failed breakout sparked significant volatility in the crypto markets.

According to data, over $495 million was liquidated in 24 hours, marking the crypto sector’s largest liquidation event. This stoked fears of a potential long squeeze.

Bitcoin Liquidations, Long Squeeze Risk

Recent data points toward a troubling scenario for Bitcoin traders. Since November 23, liquidations have amounted to nearly $144 million, with $98 million attributed to long positions and $46 million to shorts. These liquidations indicate overleveraged long traders who bet aggressively on Bitcoin breaching the $100,000 price point.

This aggressive unwinding of long positions carries the risk of triggering a long squeeze. A long squeeze occurs when traders holding long positions are forced to sell their assets due to margin calls or stop-loss triggers. This amplifies selling pressure, creating a cascading effect that drives prices lower.

However, with Bitcoin’s funding rate declining—indicating reduced demand for leveraged longs—the threat of such a scenario seems to be diminishing. Flattening open interest (OI) further suggests a lack of new capital entering the market, highlighting traders’ caution.

Moreover, Bitcoin’s inability to sustain bullish momentum has dented market optimism. The charts show a significant dip in OI-weighted funding rates, correlating with Bitcoin’s retracement from its highs. Historically, such conditions have either preceded extended consolidation or deeper corrections.

Bitcoin Price Action Cooling Off

The minuscule daily candle that the BTC/USD pair has formed on Nov. 25 shows the declining excitement of market participants. The bullish cues driving Bitcoin prices, including the Trump election win and Gensler exit, seem to have been priced in by the market.

Bitcoin’s price could drop to find support near $88,700 if the rally corrects. Furthermore, breaching the immediate support might force BTC’s price to test support near $73,600.

On the other hand, a break above $100,000 could give Bitcoin’s price the impetus to rally to the resistance near $110,500. Breaking and consolidating above the immediate resistance might help the token rally to the resistance near $126,000 before pulling back. The consolidation phase could last till 2025 unless BTC finds some new cues to fuel its bull run.

The relative strength index for Bitcoin continued to be overbought, with a score of 78.19 on the daily charts. The overbought RSI levels add to the bearish cues against Bitcoin, strengthening the correction narrative.