- Market makers are defending BTC’s range highs to trap late longs and build liquidity for a potential continuation breakout.
- A drop in funding rates and a negative Premium metric suggest late long positions were flushed out of the market.
- Open interest spiked during a fake breakdown, now declining as shorts begin to unwind, indicating pressure building for a squeeze.
Bitcoin price activity is currently showing signs of compression as market makers appear to defend the range highs. This strategic phase may be setting the stage for another breakout, mirroring past setups observed earlier this year.
Market Makers Use Familiar Strategy to Build Liquidity
According to market analyst Luca, the present Bitcoin structure resembles the conditions seen before the prior short squeeze to $123,000. He noted that market makers are deliberately defending the range highs to lure in bears and trap late long positions. This phase is considered a liquidity-building mechanism designed to flush weak hands before driving the next move higher.
Luca highlighted a drop in funding rates and a return to negative readings in the Premium metric on Velo Data. These trends suggest a flush of late long positions from the market. This aligns with Bitcoin’s price behavior during its previous consolidation before a major upside breakout.
Open interest also surged during a recent fake breakdown, which has since begun to reverse. According to Luca, this shift signals that short positions are starting to feel pressure, indicating a potential for another short squeeze.
Liquidation Heatmap Suggests Another Liquidity Sweep
In a follow-up tweet, Luca pointed to the current liquidation heatmap for Bitcoin, calling it a key moment for market structure. If market makers maintain their current stance, range highs should remain strongly defended, supported by large sell walls, particularly on Binance.
He added that this tactic typically precedes a final sweep of the lows, a method designed to trap additional participants before a breakout. This pattern of liquidity hunting has been a recurring structure, notably from late May to late June, which preceded a run to new all-time highs.
This strategy often results in stop orders accumulating at key resistance levels, giving market makers the liquidity needed to push Bitcoin higher.
Data Metrics Reflect Compression and Trap Conditions
Multiple data points currently reflect a tactical compression phase. Funding rates are falling, while the Premium metric flipping negative shows reduced bullish sentiment among late buyers. This shift in positioning is crucial for fueling upward price movements.
Meanwhile, the drop in open interest after its spike reinforces the view that short positions are increasingly under threat. These movements suggest the market is positioned for a continuation move, following the established pattern of sweeping lows and targeting liquidity before any sustained breakout.
