Bitcoin (BTC) held above the $70,000 level even as traders increasingly positioned for downside, with analysts warning volatility patterns could signal a turning point in the crypto cycle.
Bloomberg Intelligence strategist Mike McGlone said Bitcoin’s price behavior alongside falling Nasdaq-100 volatility suggests the market may be entering a late-cycle phase. At the same time, according to CryptoQuant, an analytics firm tracking cryptocurrency data, the number of short positions being taken on all major exchanges is rapidly increasing.
Currently, Bitcoin is trading about 2% above the $70,000 level per TradingView data, and it is still consolidating after the recent volatility that affected global markets.
Source: TradingView
McGlone noted in a post on X that the Nasdaq-100’s volatility index has fallen below Bitcoin’s 50-day moving average. As McGlone pointed out, historically, the same type of trend is associated with changes in risk-asset cycles.
Source: X
McGlone further said that Bitcoin has often acted as a speculative “risk-asset leader” since its initial growth period in 2009, when its market capitalization was still in the millions. In his view, the current market environment may be different than previous ones.
He added that a “low-price-cure cycle”, which is typically seen in commodity markets, may be emerging in crypto markets. A low-price-cure cycle occurs when speculative assets increase in value over a relatively short period until economic conditions ultimately cause them to lose value.
Additionally, McGlone pointed to the potential for several political events in the United States to act as catalysts for developments in the Bitcoin and cryptocurrency space. He also noted that regulatory changes in the U.S. could influence future market movements.
According to him, the launch of U.S. spot Bitcoin ETFs likely contributed to rising enthusiasm across the crypto market. Increased momentum surrounding the industry during President Donald Trump’s administration may have also fueled peak market excitement.
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Although BTC price is currently trading above the $70,000 mark, derivatives traders are becoming increasingly cautious. According to CryptoQuant analyst Darkfost, Bitcoin on Binance has been recording negative funding rates for almost a week, which indicates that short sellers dominate the futures market.
Funding rates on Binance dropped below -0.006 on March 10 and March 11, and indicated extreme bearish sentiment from traders using high amounts of leverage. Darkfost described that this type of trend is often seen during times of “market disbelief,” where traders are doubting whether a price recovery is sustainable.
Source: CryptoQuant
However, similar extremes in positioning have sometimes created the opportunity for an opposite outcome. If BTC continues to extend its price rebound, the liquidation of short positions will provide additional pressure to continue its upward momentum.
If that happens, then short sellers who are forced to close their positions will essentially be buying back BTC and provide liquidity to the rally. Historically, these types of dynamics have caused rapid short squeezes in crypto markets, particularly when negative funding rates remain negative for long periods of time.
A short squeeze or a larger cycle shift may occur if Bitcoin holds above $70,000 while traders heavily short the market.
Risk Disclosure: This article is for informational purposes only and does not constitute financial or investment advice.
This article contains market analysis and price predictions. These are not guarantees. Crypto markets are volatile. Always DYOR. Not financial advice.
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