Two weeks after setting a historical peak, Bitcoin (BTC) once again returns to test the 105,000 USD threshold – a key price level that is putting significant pressure on market sentiment. In the last attempt to break this level, BTC quickly plunged to 100,000 USD. With no clear bottom identified, traders are becoming more cautious and tense than ever.
History shows that in the current uncertain environment, capital often tends to rotate towards altcoins in search of short-term profits outside the shadow of BTC. However, despite seemingly favorable market conditions, most altcoins are still under strong selling pressure, recording double-digit weekly declines.
According to Bitcoin Magazine, 'altseason' has not really started yet. However, with BTC falling into a state of hesitation and a fragile market structure, this could be the time for savvy investors to position themselves for a potential reversal.
High Long ratio signals potential market rebalancing
Although the spot market has not recorded significant volatility, the derivatives market is showing signs of preparing for a considerable shift.
Data shows that over 70% of altcoins are heavily leaning towards the Long side, and on the Binance exchange, institutional investors are not hiding their positions: on average, over 60% of trades for large-cap assets are placed in the Long direction.
However, this is not just a manifestation of simple optimism, but a strategy to accept risk following the recent large-scale liquidation. Traders are expecting a short-term rebalancing, with the possibility of a 'short squeeze' — a situation where short positions are forced to close as prices rise quickly, driving the market even higher.
The Long/Short Ratio chart shows that many altcoins are above the 1.0 level, clearly reflecting the Long inclination of the market — a rather risky move in the current volatility context.
If BTC continues to plunge to 100,000 USD, the Short side may take the lead, especially as new Short positions continue to increase. Conversely, if the market maintains stability and overcomes the adjustment pressure, late Short positions will become 'fuel' for a strong price squeeze, just as the Long side is betting.
Currently, the situation is still one of tug-of-war and the outcome will depend on which side acts faster and more accurately.
Altcoin could bounce back if Bitcoin stabilizes
With Bitcoin's dominance ratio back above 65%, altcoins are still being dominated by BTC's trend. If Bitcoin returns to the 100,000 USD range, it's likely that altcoins will continue to face downward pressure.
The previous correction clearly demonstrated this: when BTC fell 9.6% from its peak, Ethereum (ETH) dropped even more sharply by 10.25%. The reason is that many altcoins are overloaded with Long positions, increasing selling pressure when the market reverses.
However, Bitcoin Magazine notes that the current cycle is undergoing a clear structural change, making the scenario of BTC dropping deep to 100,000 USD less likely.
If Bitcoin maintains stability, it's possible that altcoins will lead the recovery – especially if a 'short squeeze' occurs and boosts growth momentum.
Instead of panicking over this correction, investors could view it as a strategic opportunity to enter the market early, anticipating a potential breakout phase in the near future.