Bitcoin rally could trigger $5 billion short squeeze near $75,000

11:17

By: Dakir Madiha

Bitcoin rally could trigger $5 billion short squeeze near $75,000

Around $5 billion in short cryptocurrency positions could face liquidation if Bitcoin rises to $75,000, highlighting a key pressure point in the derivatives market that could accelerate price gains.

Bitcoin was trading near $69,000 on March 22 after retreating from a brief move above $75,000 earlier in the month. The $75,000 level has emerged as a major resistance zone, repeatedly tested in 2026 without a sustained breakout.

Earlier in March, Bitcoin surged to $74,000 following political support for US crypto legislation, triggering hundreds of millions of dollars in short liquidations. Prices briefly approached $75,800 before reversing. Data at the time showed significant liquidation risks on both sides, with billions of dollars in leveraged positions exposed to sharp moves.

Recent estimates suggest bearish positioning has increased as traders rebuilt short positions during the pullback. This concentration of short bets creates conditions for a potential short squeeze, where rising prices force traders to buy back assets, adding further upward pressure.

Analysts say upcoming derivatives events could amplify volatility. A major options expiration on March 27 may drive additional buying as market participants unwind hedging strategies. Persistently negative funding rates across exchanges indicate a dominance of short positions, a setup often associated with rapid upward moves if sentiment shifts.

Despite bearish positioning in derivatives markets, spot demand has remained supportive. US-listed Bitcoin exchange-traded funds recorded six consecutive days of net inflows through mid-March, totaling nearly $1 billion. Institutional products, including BlackRock’s iShares Bitcoin Trust, have helped absorb selling pressure and stabilize prices.

Whether Bitcoin can break above $75,000 remains uncertain. Analysts note that recent rebounds have been driven largely by short covering rather than sustained buying interest, suggesting that a decisive move higher would likely depend on stronger underlying demand.