This article was first published on The Bit Journal.
Bitcoin is under a lot of pressure at the moment from nearly every direction in the market. Exchange-traded funds are dumping billions of dollars worth of BTC, short-term holders are exiting at a loss, and miners are offloading large amounts of coins onto exchanges.
The current market structure has become overwhelmingly bearish which normally could trigger a Bitcoin short squeeze if the selling pressure starts to ease up.
Bitcoin was trading around $62,686 at the time of writing after taking a rough 14.8% hit on the past week. The decline has pushed sentiment toward extreme pessimism.
Record ETF Outflows Weigh on Bitcoin
Institutional investors have been selling up, and it is currently one of the biggest problems facing Bitcoin at the moment.
Galaxy research reports that US-based spot Bitcoin ETFs had 13 consecutive trading days of net outflows from the 15th May to the 3rd June, which is the longest streak of this sort since they launched. During that time, investors pulled out 59,351 BTC worth about $4.33 billion. In fact, the 20-day rolling outflow window reached a record $5.42 billion, equivalent to 73,080 BTC.
Several market watchers say that the withdrawals aren’t because investors have lost faith in Bitcoin as a long term investment, but because of overall capital rotation, investors moving their money into other areas that are doing better at the moment.
While crypto funds have seen redemptions happen, hundreds of billions of dollars have continued to flow into artificial intelligence infrastructure and technology related investments
As a result, there has been a noticeable reduction in demand just as supply entering the market continues to rise.
Panic Selling Keeps Intensifying Across the Market
The pressure is not just coming from the institutions alone. According to CryptoQuant data, demand for Bitcoin has actually contracted by 501,000 BTC over the past month and short term holders have become some of the most aggressive sellers around.
In a 24 hour period, these investors sent 53,800 BTC to exchanges and every single one of those transfers was a loss, meaning that these holders are choosing to get out of their positions rather than wait for the market to recover.
This sort of behavior often appears just before local market capitulation events, where weak hands exit and stronger hands absorb the supply.
Miners have also added uncertainty.
On June 2nd, Bitcoin miner inflows to Binance reached 24,716 BTC, which beat a previous peak in February by 6.8%. Now, it is worth noting that miner transfers don’t automatically mean immediate selling but having that kind of supply close to active trading venues does create a bit of uncertainty.
Long Term Holders Continue to Build Stash
What’s really interesting about the current cycle is the contrast between short term panic and long term conviction.
SmashFi CEO Brian HoonJong Paik says that long term holders added 200,000 BTC last month and now collectively control an incredible 16.3 million BTC, near record levels.
Paik said:
“The people who have held Bitcoin the longest are not selling into this weakness. They are buying your panic.”
The scale of institutional accumulation over the past couple of years is also noteworthy.
CryptoQuant CEO Ki Young Ju has pointed out that since January 2023, Strategy has somehow managed to quietly build up an impressive 711,206 Bitcoin, while at the same time shedding a mere 32 Bitcoin.
Since March 2024, when Bitcoin was trading at around $63,000, spot ETFs absorbed another 509,102 BTC while Strategy added 650,706 BTC.
That all adds up to 1.24 million Bitcoin being absorbed by institutional buyers, more than the estimated 1 million attributed to the legendary Bitcoin creator Satoshi Nakamoto.
But yet, despite all this demand, Bitcoin remains near similar price levels, and that in itself is a sign of how powerful the downwards pressure on the market is.
Why a Bitcoin Short Squeeze Is Now a Real Possibility
While spot markets appear weak, derivatives data appears different.
According to Alphractal, Bitcoin’s “liquidation map” has become heavily skewed toward bearish positioning.
The market moved from being 66% short-heavy to 76%, before reaching an extreme 89% short bias within three days.
Current positioning shows approximately $98.3 billion in short exposure compared to just $12.2 billion in long positions. That creates a short-to-long ratio of roughly 8.06x.
Now this imbalance matters because short sellers eventually become buyers when positions are liquidated.
Alphractal’s data shows over $6.3 billion in short sale triggers sitting in between 15% and 32% above Bitcoin’s current price. Here are some key levels included:
| BTC Price Level | Potential Short Liquidations |
| $72,201 | $2.1 billion |
| $80,293 | $2.2 billion |
| $82,630 | $2.0 billion |
Meanwhile, downside liquidation pressure appears far smaller, with only about $1.3 billion in long liquidations concentrated near $61,054.
Last time Alphractal recorded something similar to this extreme reading was back in November 2022 when the market became 84% short-heavy. Bitcoin subsequently gained approximately 24% over the next 11 trading sessions.
Conclusion
Bitcoin’s current decline is backed by real selling pressure. ETF withdrawals, miner transfers, and loss-driven selling from short-term holders continue weighing on the market.
The same selloff that is sending Bitcoin tumbling is also creating a crowded bearish trade.
If ETF outflows slow, miner selling eases, or broader market sentiment stabilizes, the enormous wall of short positions could quickly turn into forced buying.
For now, the market remains under pressure, but the growing Bitcoin short squeeze setup suggests the next major move may not be as one-sided as current sentiment implies.
Glossary
Bitcoin short squeeze: A rapid price increase caused by short sellers closing losing positions.
ETF outflow: Money being pulled out of exchange traded funds.
Capitulation : A phase where investors sell assets due to fear or losses.
Short Term Holder : An investor who has held Bitcoin for a relatively brief period.
Liquidation : Automatic closure of leveraged positions when losses exceed collateral.
Frequently Asked Questions About Bitcoin Short Squeeze
What is a Bitcoin short squeeze
A Bitcoin short squeeze is a situation when rising prices force short sellers to buy BTC to close positions, accelerating upward price momentum.
Why are Bitcoin ETFs seeing outflows?
Investors have been reducing exposure amid macroeconomic uncertainty, profit-taking, and increased interest in AI-related investments.
How much money has left Bitcoin ETFs recently?
Galaxy Research reported $4.33 billion, or 59,351 BTC, left spot Bitcoin ETFs during a 13-day outflow streak.
Are long term Bitcoin holders actually selling?
Data suggests long term holders are accumulating, not distributing any.
References
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