Bitcoin Shorts Stack Up as Fed Cut Odds Near 90%—But Rally Looks Like Short-Covering, Not Conviction

Bitcoin is coiled in a tight range with leverage stretched on both sides and the policy catalyst now in sight. The interesting tell isn’t the price—it’s the positioning. The market keeps grinding higher, yet the internals look like shorts backing off rather than new buyers stepping in.

Here’s the setup. Roughly $6 billion in leveraged exposure sits close to the trigger. CoinGlass flags about $3 billion in shorts that would be forced to cover on a quick 3% move to $96,250, while $3.52 billion in longs would be vulnerable if price slips 4.54% to $89,209. With bond markets assigning nearly 90% odds to a quarter-point rate cut, a mild upside surprise could spark a squeeze toward the round-number magnet near $100,000. Bitcoin trades around $93,800—up about 1% on the day and nearly 4% on the week, per CoinGecko.

But the driver matters more than the destination. Since November 21, open interest in Bitcoin derivatives has been fading, while the cumulative volume delta for perpetuals has climbed, according to Velo data. That divergence typically signals shorts buying back risk—fueling price—without a matching build in fresh length. It’s a rally carried by de-leveraging, not conviction.

The order book echoes that fragility. Spot and perp depth out to 10% has flipped negative since December 2, implying thin resting liquidity and a reluctance to chase higher. Funding and the Coinbase premium—quick gauges for risk appetite and spot-led demand—are indecisive, showing little directional bias. For an uptrend to actually mature, you’d usually want to see spot CVD and open interest rise together, not move in opposite directions.

This context reframes the squeeze debate. A short squeeze is forced buying—price moves up, shorts cover, and the bid intensifies. That dynamic looks more probable than a long wipeout if the Fed validates the market’s dovish lean. Ryan Lee, chief analyst at Bitget, argues a squeeze higher is the higher-odds path given steady institutional inflows, constructive regulatory tone, and gradually risk-on sentiment. That’s reasonable, but it still demands follow-through from spot buyers to be durable.

On the other side, Adam Chu at GreeksLive notes that crypto faces firm resistance with many participants maintaining a bearish mindset, leaving the market vulnerable. I’d read that as a warning: if the policy message disappoints—either a hawkish cut or a surprise hold—weak spot demand and thin books can accelerate downside to the $89,209 liquidation pocket. In this tape, liquidity gaps do as much work as fundamentals.

The core issue to focus on is the quality of the bid. A market led by short-covering can print higher prices but often fails fast without incremental, sticky inflows. The liquidation map is clear ($96,250 above, $89,209 below), yet the path of least resistance will depend on two gauges into and out of the decision: - Are spot CVD and open interest rising together? - Does order-book depth rebuild on the bid after any pop?

If the answer turns “yes,” the $100,000 conversation gets more credible. If not, squeezes may be sharp but self-limiting. Either way, this is positioning risk masquerading as trend—trade the mechanics, not the headline.