Bitcoin Price Action: Will a Short Squeeze Push BTC Beyond $100K?

Bitcoin (BTC) has entered a period of rangebound price action, frustrating traders and market participants alike. With Bitcoin hovering below $100,000, traders are increasingly looking for signs of a trend shift as the cryptocurrency continues to test their patience. After reaching an all-time high in mid-January, BTC has been unable to break out decisively from its three-month trading corridor, leading to growing speculation about what the next move will be.
Despite the lack of movement, there are indications that the market is gearing up for a potential short squeeze, with liquidity and exchange flows playing key roles in shaping BTC's short-term outlook. However, as the week progresses, macroeconomic factors such as the Federal Reserve's stance on interest rates and increasing jobless claims are adding further uncertainty to the equation.
Bitcoin’s Rangebound Action and the Potential for a Short Squeeze
Bitcoin has been stuck between the $90,000 and $100,000 range for over a month now. Traders are starting to become more cautious as the price nears the lower end of this range. Some traders, like CrypNuevo, have highlighted the possibility of Bitcoin dipping further toward the $91,000 level, with potential support levels at $88,000.
"There is a lot of risk near the range lows," CrypNuevo cautioned in a recent X post. "Many traders have set long positions with stop-loss orders right below, which makes the range vulnerable to a possible deviation."
Despite the caution, there are those who see opportunity in the current price action. CrypNuevo, for instance, mentioned that the liquidity around key levels like $93,000 and $99,200 could lead to a short squeeze, particularly with Bitcoin recently testing levels below $96,000.
Fellow trader TheKingfisher, known for analyzing liquidation data, echoed this sentiment, suggesting that a short squeeze could be the most likely next event on short timeframes. Traders are now targeting the $102,000 area as a possible short-term price ceiling, with the expectation of a potential upward wick to $105,000.
Fed Minutes and Jobless Claims: Potential Macro Headwinds
As Bitcoin faces a quiet week in terms of price action, the broader financial market is awaiting key macroeconomic data. On February 20, the minutes from the January Federal Reserve meeting are due to be released. The Fed's decision to pause interest rate cuts has left market participants wondering whether inflation will remain persistent, delaying the prospects of rate cuts for the rest of the year.
The CME Group’s FedWatch Tool places the odds of a 0.25% rate cut at the next Fed meeting in March at just 2.5%, underscoring the central bank’s hawkish stance. Meanwhile, jobless claims data, which will be released on February 20, is expected to provide further insights into the health of the US economy. Jobless claims have been trending higher, which may contribute to increased volatility in risk assets, including Bitcoin.
Despite inflationary concerns, markets continue to trade near record highs, though there is growing caution as unemployment figures rise, potentially signaling a slowdown in the broader economy.
Bearish Phase: Exchange Flows Signal Caution
Bitcoin exchange flows have raised concerns about the potential for a bearish phase in the market. The Inter-Exchange Flow Pulse (IFP) metric, which tracks the movement of BTC between spot and derivative exchanges, has recently turned bearish. Historically, this shift in trend has often preceded periods of price decline.
When Bitcoin flows from derivative exchanges to spot exchanges, it typically indicates that traders are closing long positions and reducing exposure to risk. This trend suggests that large investors, or "whales," may be scaling back their positions, which could signal a shift toward a more cautious market environment.
Despite this, some analysts are interpreting the overall exchange inflow/outflow data differently, pointing to continued demand for Bitcoin. A high demand zone, as indicated by the 30-day moving average (DMA) of exchange inflows and outflows, suggests that Bitcoin remains in a period of accumulation. This could potentially lead to short-term upward price movement, despite the current lack of a clear trend.
Bitcoin’s Bull Case: Demand and Investor Confidence
While short-term price action remains uncertain, there are signs that Bitcoin's long-term outlook remains strong. On-chain metrics, including exchange inflow and outflow data, show that demand for Bitcoin is still high despite its price consolidation. This demand is reflected in the 30-day moving average of exchange inflows and outflows, which suggests that investors continue to accumulate Bitcoin at current price levels.
Bitcoin’s network continues to see healthy inflows, with whale activity contributing to the growing demand. If the trend of high demand persists, Bitcoin could see a resumption of upward momentum, potentially leading to new all-time highs in the future.
Euphoria and Profit-Taking: Are We Nearing the Top?
Bitcoin's long-term holders (LTHs) are showing signs of profit-taking, with the Net Unrealized Profit/Loss (NUPL) metric for this group staying above 0.75 for an extended period. Historically, periods of sustained NUPL above 0.75 are associated with investor euphoria, which often coincides with market tops.
This behavior suggests that Bitcoin may be nearing a cycle peak, as LTHs cash out after substantial unrealized gains. However, the exact timing of this peak remains unclear, and the market could continue to fluctuate before any decisive trend emerges.
Conclusion: The Road Ahead for Bitcoin
Bitcoin's price action this week is characterized by a sense of indecision, with traders watching key levels for signs of a breakout. A short squeeze remains a plausible scenario, particularly as liquidity builds around important price points. However, macroeconomic factors such as inflation, Fed policy, and rising jobless claims add uncertainty to the outlook.
Despite the recent lull in price movement, demand for Bitcoin remains robust, and the potential for a bull market continuation remains intact. However, traders should remain cautious as the market tests support levels and waits for further signals from the Fed and broader financial markets. As always, Bitcoin's next big move will depend on how these factors unfold in the coming days and weeks.
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