Bitcoin shorts above $70,000 risk squeeze as downside narrows

Short positions opened above $70,000 are at risk of liquidation after a sharp contraction in Bitcoin futures open interest and a shift to negative funding. Traders who sold over the weekend may face forced covering if buying pressure returns.

Researcher Axel Adler Jr. compiled weekly changes in aggregate Bitcoin futures open interest measured in BTC. The metric moved from an 8.9% rise on March 31 to a seven-day change of -2.46% by Monday, with total open interest near 318,000 BTC. Adler noted the series flipped to -7.2% on April 4, marking a rapid reduction of leverage and an early deleveraging phase.

Perpetual futures funding rates have also turned negative. The seven-day average funding across Binance, Bybit and OKX dropped from about 0.33% on March 31 to roughly -0.1738% by April 13, with Bybit and OKX showing deeper negative readings. A negative funding rate means sellers pay buyers to hold positions, creating a short-side bias that can force short positions to cover if demand returns while prices stay elevated.

Market flows showed long positions pressured first during the reset, followed by an increase in short exposure as traders entered new downside bets above $70,000 over the weekend. Monday’s activity included closures of multiple leveraged positions, leaving recent short entries exposed if liquidity at higher prices is thin.

Michaël van de Poppe of MN Capital pointed to three long-term Z-score measures at extreme lows: the Puell Multiple Z-Score is at its weakest in a decade, the SOPR Z-Score is at its lowest reading on record, and the MVRV Z-Score has printed its weakest level ever. Van de Poppe flagged visible liquidity between about $64,000 and $66,000 and said the $74,000 area has acted as an upside ceiling. He added that while markets can still sweep lows for liquidity, he does not expect much more downside and estimates roughly 90% of the downside is already captured.

Open interest is the total number of outstanding futures contracts and is used to gauge leverage in derivatives markets. Funding rates are periodic payments exchanged between perpetual swap holders to keep futures prices aligned with spot; positive rates mean longs pay shorts, negative rates mean shorts pay longs.

Market positioning can change quickly as liquidity shifts, and leveraged trades remain sensitive to rapid price moves.