Bitcoin Shorts Above $70K at Risk Since ‘90% of Downside’ Is Already Complete

Why It Matters

The contraction of leverage and extreme undervaluation metrics indicate a potential short‑squeeze and limit further downside, reshaping trader strategies and market sentiment. This dynamic could set the stage for a price rally or heightened volatility, affecting investors and crypto‑related businesses.

Key Takeaways

• Bitcoin futures OI fell 2.46% to 318,000 BTC.
• Funding rates turned negative, sellers paying buyers.
• Puell Multiple Z‑Score at decade low.
• SOPR Z‑Score hits record low, indicating loss‑selling.
• Shorts above $70K risk squeeze if price stays.

Pulse Analysis

The recent dip in Bitcoin futures open interest marks a decisive shift from the bullish surge that pushed prices above $73,000 in late March. Open interest, a proxy for leveraged exposure, fell 2.46% on April 4, bringing total contracts near 318,000 BTC. Simultaneously, the seven‑day average funding rate across Binance, Bybit and OKX slid from a modest 0.33% to –0.1738%, effectively paying long‑side traders to hold positions. This negative funding environment underscores a growing short‑bias, yet the price’s resilience above $70,000 suggests that long‑side leverage has already been stripped, leaving the market vulnerable to a short squeeze.

Beyond the futures data, three long‑term valuation indicators have reached unprecedented lows. The Puell Multiple Z‑Score, which measures miner revenue against historical averages, is at its weakest point in a decade, echoing conditions seen at the 2018, 2020 and 2022 bottoms. The SOPR Z‑Score, tracking whether coins are sold at profit or loss, has broken its previous record, indicating widespread loss‑selling. Likewise, the MVRV Z‑Score sits at an all‑time low, placing Bitcoin near its aggregate cost‑basis. Collectively, these metrics imply that most investors have already absorbed the bulk of the downside, leaving limited room for further price erosion.

For market participants, the confluence of a leveraged reset and extreme undervaluation creates a narrow window of opportunity. Traders who entered short positions above $70,000 may confront rapid liquidations if buying pressure resurfaces, while long‑term holders could benefit from a reduced risk of deep corrections. Institutional players monitoring open interest and funding dynamics will likely adjust exposure, and any breakout above the $74,000 ceiling could trigger a cascade of short squeezes, propelling Bitcoin into a new rally phase. The next few weeks will be pivotal in determining whether the market consolidates or accelerates upward.