Bitcoin [BTC] has been trying to cross the $70,000 mark twice a week. Both attempts were rejected and were accompanied by high volatility. A recent AMBCrypto report highlighted why a short squeeze was likely despite the geopolitical tensions roiling the market.
Volatility was the highest since 2022, and short-term bondholders continued to suffer losses. Could this pave the way for seller exhaustion?
Hope for Bitcoin holders in the long term
Source: Axel Adler Jr
Uncertainty in 2026 Caused Five Weeks of Sustained Outflows from Bitcoin Spot ETFs, Crypto Analyst Notes Axel Adler Jr. However, at the time of writing these had become positive again.
This could be an encouraging development. Yet one weekly bar may not be enough to turn the fortunes of the market around.
The weekly supply at a loss reached 46.3%, extending into the pullback territory that historically marked extreme market stress. Again, this was not a sign that recovery is imminent.
It could take weeks and months to reach 60% or higher, which marked the bottom of the past two bear markets.
Continued positive ETF flows and a drop in supply at a loss would be a sign of market recovery.
This is why volatility should not deter short-term buyers
The macro conditions certainly seem chaotic and scary. And yet Bitcoin has managed to defend the $60,000 level twice in the past month. In recent days, it has made higher lows as it heads towards the $70,000 ceiling.
According to Glassnode, this level has remained dominated by profit-taking, which underlines the potential fragility of the economy the current question.
The seven-day moving average buyer buy/sell ratio rose above 1 on February 25 and remained above 1 for most of last week. This was also a positive development, but vulnerability remained.
An increase in Open Interest showed that speculators were expecting a breakout of over $70,000, a breakout that has not yet occurred.
There also seemed to be a cluster of long liquidations with high levels of debt ranging from $65.2k to $67k. However, the cumulative overhead for the short liquidation leverage was much higher than the long liquidation leverage.
In other words, an overhead price move would detect short liquidation levels, causing a short squeeze. Based on the available evidence, a rise could be likely, but traders should remain cautious.
Final summary
- Spurred by geopolitical tensions and troubled global markets, Bitcoin is seeing its highest volatility levels since 2022.
- Supply losses fell below 40%, indicating significant stress among BTC holders, while weekly ETF netflows saw their first inflows.