Bitcoin BTC is edging toward a price level that could put major pressure on bearish traders, with derivatives data signaling the setup for a potential short squeeze and a developing local bottom.
Recent derivatives activity shows that a wave of large short positions—many likely placed on Binance during the latest market sell-off—faces liquidation risk around $87,000, according to Coinglass. A breakout above that threshold could force these positions to close, adding sudden buying pressure and driving prices higher in a classic short-squeeze scenario.
Funding trends are reinforcing that view. The global average funding rate has moved into negative territory at -0.006%, indicating shorts are now paying longs to maintain exposure. Glassnode notes that these negative flips typically mark periods of selling exhaustion and have historically aligned with local market lows when they persist.
Leverage has also been washed out. Open interest spiked to nearly 752,000 BTC on Nov. 21 as Bitcoin hit its local low near $80,000, but has since fallen to about 683,000 BTC. That level sits comfortably below the 741,000 BTC open interest recorded on Oct. 10, before the major liquidation cascade.
Combined, the decline in leverage, negative funding rates, and the approach toward key liquidation levels suggest the market may be transitioning into recovery mode—so long as macro conditions remain steady.
