Two weeks after setting a historical peak, Bitcoin (BTC) once again returns to test the $105,000 threshold – a key price level putting significant pressure on market sentiment. In the last instance of breaking this level, BTC quickly plunged to $100,000. With no clear bottom identified, traders are becoming more cautious and tense than ever.
History shows that in the context of uncertainty like the present, capital tends to rotate to altcoins in search of short-term profits outside of BTC's shadow. 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 in a state of hesitation and the market structure fragile, this could be the moment for savvy investors to begin positioning for a potential reversal.
High Long ratio signals market rebalancing potential.
Although the spot market has not recorded significant volatility, the derivatives market is showing signs of preparing for a substantial shift.
Data shows that over 70% of altcoins are heavily leaning towards the Long side, and on Binance, institutional investors are also not hiding their positions: an average of over 60% of trades for large-cap assets are being placed on the Long side.
However, this is not merely a manifestation of simple optimism, but a risk acceptance strategy following a recent large-scale liquidation. Traders are anticipating a short-term rebalancing, with the possibility of a 'short squeeze' — a situation where short positions are forced to close when prices rise rapidly, pushing the market even higher.
The Long/Short Ratio chart shows that many altcoins are above the 1.0 level, clearly reflecting the Long bias of the market — a rather risky move given the current volatility.
If BTC continues to plunge towards $100,000, the Short side could gain the upper hand, especially as new Short positions continue to increase. Conversely, if the market maintains stability and overcomes the adjustment pressure, late Short positions could become 'kindling' for a strong price squeeze, exactly as the Long side is betting on.
Currently, the situation remains one of contention, and the outcome will depend on which side acts faster and more accurately.
Altcoins may rebound if Bitcoin stabilizes.
With Bitcoin's dominance ratio back above 65%, altcoins are still being influenced by BTC's trend. If Bitcoin returns to the $100,000 range, it is likely that altcoins will continue to face downward pressure.
The previous correction clearly demonstrated this: when BTC dropped 9.6% from its peak, Ethereum (ETH) declined 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 distinct structural change, making the scenario of BTC dropping deeply to $100,000 less likely.
If Bitcoin maintains stability, it is possible that altcoins will lead the recovery — especially if a 'short squeeze' occurs and drives growth momentum.
Instead of panicking in the face of this adjustment, investors can view this as a strategic opportunity to enter the market early, anticipating a potential breakout phase in the near future.
