CryptoQuant's analysis reveals Binance short squeeze pressure driving Bitcoin price movements

On May 26, 2025, CryptoQuant shared an insightful analysis highlighting the impact of Binance's short squeeze pressure on Bitcoin's price dynamics.

CryptoQuant's analysis highlights how Binance short squeeze pressure impacts Bitcoin price movements, with historical patterns suggesting sharp rallies as traders face liquidations.

On May 26, 2025, CryptoQuant shared an insightful analysis showcasing the interplay between Binance short squeeze pressure and Bitcoin’s price dynamics.

The chart depicts Bitcoin’s price movements from April 20 to May 24, 2025, juxtaposed with Binance short and long squeeze pressure. Key periods of short squeeze activity, denoted by surges in pressure, align with significant price increases.

For instance, a short squeeze in early May, following a low-volatility phase, propelled Bitcoin’s price from $88,000 to $104,000 within days. Another short squeeze signal around mid-May preceded a rally to $111,000, Bitcoin’s all-time high at the time.

Short squeezes arise when traders holding short positions are forced to close them due to rising prices, setting off a chain reaction of buy orders that amplifies the upward momentum. This metric is particularly useful for identifying moments when short sellers are under pressure, often leading to rapid price surges.

Historical data from the chart shows consistent patterns: periods of low volatility followed by short squeeze signals have repeatedly resulted in Bitcoin price breakouts, a trend also observed in early 2024 when Bitcoin hit $70,000 post-ETF approvals.

Current Market Conditions Indicate Potential Breakout

The present market environment, as of May 26, aligns with these historical patterns. Bitcoin (BTC) recently recovered to $109,000 after a dip to $106,800, driven by President Trump’s decision to delay EU tariffs.

However, Binance data indicates that 62% of traders with open BTC positions are short, increasing the likelihood of another short squeeze if Bitcoin breaks above $110,000.

CoinGlass reports $108 million in short liquidations over the past 24 hours, underscoring the pressure on bearish traders. This dynamic is further amplified by institutional activity, such as the famous whale James Wynn on Hyperliquid, which saw a $75 million BTC long position opened.

The broader market context also supports potential volatility. The Crypto Fear and Greed Index remains in the “Greed” zone, reflecting bullish sentiment, while open interest in Bitcoin futures rose 1.96% to $76 billion.

Coupled with short squeeze pressure and macroeconomic uncertainties like evolving trade policies, Bitcoin’s price could experience significant swings.

Traders should capitalize on this momentum by prioritizing long positions:

* Long entry point: If BTC shows signs of consolidating above $110,000 and a strong green candle with high volume is visible on Tuesday or Wednesday, indicating bullish continuation, then enter a long position.

* Long exit: Aim for a price bracket of $115,000–$118,000 for taking profit on the long trade.

* Short-term scalping: For shorter-term plays, consider entering a long position on a pullback to $108,000.

* Place a tight stop-loss around $106,800 to manage risk.

Given the risk of a short squeeze amplifying price surges, avoid opening short positions this week, as bearish bets could face significant losses if the upward trend continues.