Is Bitcoin’s $105K chop a strategic trap? – Here’s what might be happening

• Bitcoin’s current retracement triggered a cautious bounce, inviting shorts to extend their bets.
• Might this pause really be a strategic setup?

Bitcoin [BTC] has slipped again into its traditional “wait and see” mode. 

After a textbook retracement to the psychological $100k degree, you’d anticipate bulls to return charging in with conviction. However as a substitute, the bounce has been underwhelming. No explosive follow-through, no parabolic restoration.

That hesitation? It’s given opportunistic shorts a gap, they usually’ve stepped in. Binance’s BTC/USDT perpetuals at the moment are displaying practically 60% quick bias, hinting that many merchants are leaning into the draw back.

Nevertheless, what if this subdued pause isn’t an indication of weak spot, however a deliberate strategic consolidation? A calculated setup, laying the groundwork for a high-volatility breakout?

Shorts strategize to revenue from bull hesitation

At present, 96.6% of Bitcoin’s provide is sitting in unrealized revenue. Add to that the truth that short-term holder (STH) supply has pulled again to November 2024 ranges.

In the meantime, retail stays on the sidelines, and with macro jitters constructing forward of the FOMC, capital has rotated into equities, leaving BTC’s momentum hanging within the steadiness.

On this context, the rising quick bias doesn’t seem reckless; moderately, it appears to be like calculated, as short-sellers eye what appears to be like like a clear reversion setup.

However what provides gas to their conviction is the shortage of directional momentum.

Merely put, with bulls displaying hesitation and no breakout in sight, nobody’s actually in management proper now. That lack of clear course leaves the door broad open for a pullback, and shorts realize it.

Supply: Hyblock Capital

As illustrated within the chart above, Bitcoin’s weekly mixture liquidation delta is exhibiting clear pink dominance, indicating that lengthy positions are being aggressively liquidated.

Consequently, this dynamic fuels a speculative bubble. Every time BTC pulls again, pressured liquidations wipe out merchants betting on a bullish rally. As a result of Funding Rates favor longs, liquidations rapidly cascade into bigger sell-offs.

It’s no shock Binance is seeing a heavy quick bias. As talked about earlier, short-sellers are capitalizing on bull hesitation, making it a first-rate technique for outsized returns.

Market rigidity peaks as Bitcoin eyes a significant quick cluster

Bitcoin has now spent over per week consolidating under the $106k–$107k zone, reinforcing it as a key resistance ceiling.

In consequence, longs hold getting flushed out, and with out large institutional money stepping again in, shorts are rising extra assured {that a} correction’s on deck.

However right here’s the factor – Each time somebody provides to a brief guess, they’re additionally setting the stage for a squeeze. Subsequently, the longer BTC consolidates with out breaking down, the extra explosive the breakout might be.

And with over $1 billion in shorts stacked simply above $107k, that degree might act like a launchpad if bulls resolve to push via.

Supply: Coinglass

Curiously, Michael Saylor appears to be positioning for precisely that, doubling down as reserves throughout exchanges proceed to shrink as buyers go for chilly storage.

Robust HODLing conduct, confirmed by on-chain metrics, additional underscores the provision squeeze narrative.

Put all of it collectively, and BTC’s present consolidation doesn’t appear to be indecision. As an alternative, it appears to be like like a entice being set. One that might lure in additional shorts earlier than unleashing a squeeze and unlocking increased targets.

At this level, HODLing may simply be the neatest transfer on the board.