BTC slips below $90K as short-covering rally stalls; $1.8B in shorts exposed above $91.3K

Bitcoin’s rebound looked energetic on the chart, but the plumbing says otherwise. The past three weeks have been led by bears taking risk off, not bulls adding exposure—leaving BTC back under $90,000 and the market hypersensitive to the next catalyst.

Here’s the setup I’m watching: after the October 10 leverage flush, BTC fell 27% into November 21 while open interest climbed and cumulative volume delta (CVD) fell—classic signs of new shorts pressing the move. The subsequent nearly 15% rise into the December 9 local high around $94,200 (CoinGecko) flipped that dynamic. Open interest declined as price rose and CVD stabilized, a tell that shorts were covering rather than spot buyers stepping in. That nuance matters because short-covering rallies often fade without real demand behind them.

Options hedging has thawed but not flipped. The 25-delta skew improved from roughly -11% to -5% (Deribit) during the upswing. Less negative skew typically reflects reduced appetite for downside insurance and marginally better sentiment. It’s not exuberant; it’s just less fearful.

The near-term hinge is whether spot participation follows through. Since December 11, open interest has ticked up about 4% to 232,000 BTC, signaling fresh speculation returning. If that is accompanied by an uptrend in CVD, you’ve got the formula for a sturdier advance. Without it, you’re leaning on reflexivity. Price has already slipped nearly 5% from the December 9 peak to about $89,860.

There is a powder keg above. CoinGlass’ liquidation map shows roughly $1.80 billion in shorts vulnerable if BTC reclaims $91,300. A clean break could trigger a mechanical squeeze—sellers forced to buy back—potentially accelerating a move higher. The catch: squeezes tend to run farther and stick longer when spot buyers are actively absorbing, and that bid has been scarce since the October event.

Sentiment isn’t uniformly cautious. On prediction market Myriad (owned by Dastan), participants assign a 69% probability that the next significant target is $100,000 before $69,000. That’s constructive, but prediction markets often track positioning more than they lead it.

One point worth dwelling on: the absence of persistent spot inflows. Derivative-led advances can print impressive candles, yet they rarely create durable trend without cash buyers. From a market structure perspective, rising open interest with improving CVD would validate new longs; rising open interest with flat or falling CVD usually just magnifies the next liquidation wave. Psychologically, traders chase squeezes; business-wise, market makers hedge and harvest volatility; ethically, the liquidation engine can become the narrative, punishing late entrants who confuse forced buying with genuine accumulation.

The backdrop into year-end remains noisy. As Bitwise CIO Matthew Hougan noted, some residual stress from the October washout may still emerge, and others have likely been selling in anticipation of the four-year cycle. Once those pressures clear, he sees room for materially higher levels, but expects choppy trading until then. That aligns with what the tape is telling us: the path that sticks is the one supported by spot demand, not just shorts blinking.

What would change my mind quickly: - A weekly close back above $91.3K with rising CVD and firm spot volumes. - Open interest rebuilding alongside constructive options skew (continued drift toward neutral or positive). - Evidence of fresh spot-led buying rather than only derivatives-driven squeezes.

Until that mix shows up, the market sits between two magnets: a visible short-liquidation cluster that can pop price in a hurry, and a thin spot bid that can just as quickly hand it back.