Bitcoin showed signs of stabilization around $120,000 on Friday, as traders analyzed the possibility of a short squeeze in the market. After reaching a local peak near $121,100, the cryptocurrency experienced a pullback but maintained critical support levels.
Trader CrypNuevo provided insights on recent market movements, indicating that liquidations at the $120,000 mark have been addressed, potentially paving the way toward higher liquidity zones. He highlighted a significant liquidity pool that may require a full retracement to $123,200.
CoinGlass data reflected strong bids forming around the $118,500 level, suggesting it could serve as a support threshold should the price undergo a correction before any upward momentum resumes.
Despite optimism surrounding Bitcoin’s market structure, the outstanding futures open interest is at a record high of $88.7 billion, raising concerns about a potential leverage flush. Trader BitBull warned that the volume of leveraged positions might lead to a sharp reset within the next couple of weeks. He speculated that such a reset could prompt holders to sell their assets, believing the recent bullish trend may be coming to an end. However, he also noted that this might set the stage for Bitcoin and altcoins to rebound and achieve new highs.
On the other hand, some traders expressed caution. Trader Roman pointed to bearish divergences present in daily and weekly charts, with the Relative Strength Index (RSI) showing a downward trend despite rising prices. He cautioned that the lack of momentum and weakening volume could signal an impending correction and advised traders to exercise caution at current levels.
Adding to the short-term uncertainty, Bitcoin’s four-hour RSI remains in overbought territory, suggesting that a cooling period might be imminent before any significant upward movement can occur. As of the latest information, Bitcoin is trading at approximately $120,679.84, indicating a precarious balance between bullish and bearish market pressures.
