Bitcoin has absorbed significant downside liquidity, reducing immediate selling pressure.
A large short liquidity cluster above $110K suggests a potential short squeeze.
Market consolidation below resistance may lead to upward volatility if a catalyst emerges.
Bitcoin (BTC) may be nearing a critical reversal point as recent liquidation data and heatmap readings show that downside liquidity has been largely absorbed. Market analysts are now closely monitoring the potential for a short squeeze, especially as sell-side pressure appears to be fading and clusters of short liquidity remain untouched above current levels.
Heavy Liquidations Suggest Exhausted Downside Momentum
Data from Coinglass reveals a significant volume of liquidations in the past week, with long positions absorbing most of the damage. The BTC/USDT liquidation heatmap shows that downside liquidity—traders with leveraged long positions below support levels—has been largely cleared. These long liquidations intensified during a drop below the $105,000 level, further wiping out leveraged bets and pushing prices to local lows.
Source: Coinglass
Simultaneously, the BTC Total Liquidations chart indicates multiple spikes in long liquidations throughout May, especially near local price tops and bottoms. This suggests that market participants have been consistently caught off guard during sharp price swings. The cumulative effect appears to have reset many overleveraged positions on the long side, potentially reducing selling pressure in the immediate term.
Key Resistance Zone Hints at Short Liquidation Risk
With long-side liquidations mostly cleared, attention has now shifted to a notable cluster of short liquidity just above the $110,000 level. According to the BTC/USDT heatmap, this region holds a dense accumulation of short positions, likely placed during the recent downtrend. These positions become vulnerable if price begins to climb and test resistance zones, especially if spot buying or derivatives momentum returns.
https://twitter.com/misterrcrypto/status/1929056064139571626
The presence of this uncollected short liquidity suggests a high probability of a short squeeze scenario—where rising prices force short sellers to exit their positions rapidly, triggering further upward pressure. Such conditions typically arise when bearish sentiment is overcrowded and downside momentum stalls, both of which now appear visible on-chain and in order book data.
Market Outlook: Waiting for a Catalyst
Although the indicators show a setup conducive to a short squeeze, analysts emphasize the importance of a trigger event or momentum shift. Without a clear catalyst—such as positive macroeconomic news or a surge in spot demand—BTC may continue to consolidate below the $110,000 resistance. However, the imbalance between exhausted long liquidations and active short liquidity offers asymmetric risk to the upside.
Desks and trader groups will pay close attention to whether buyers are starting to accumulate again or if strong bids are appearing near current prices. When the situation shifts toward something short-heavy, things could become more volatile once more.
In short, the recent lack of buyers has set the stage for Bitcoin's price to rise again. Time will tell if a short squeeze appears, but conditions now are pointing to an upward trend in the market.
