Bitcoin set for Squeeze as Record $88B Open Interest Sparks Liquidity Worries

Meta description: Bitcoin eyes a potential squeeze as record $88.7B open interest fuels liquidity concerns ahead of possible move beyond $120K.

Bitcoin is hovering near the $120,000 level as traders increase liquidity on both sides of the spot market. Data from Cointelegraph Markets Pro and TradingView show the market cooling short-term volatility while positioning for a potential move. BTC/USD touched local highs into the daily close, with traders watching the key hurdle around $121,100.

Record open interest and liquidity dynamics
The futures market for Bitcoin has grown to record levels, with total open interest across exchanges reaching $88.7 billion, according to CoinGlass. Analysts say the surge in open interest is part of a broader bid-ask balance shift as bulls seek to address an existing imbalance that could push prices higher.

Liquidity pockets and price targets
One widely watched setup involves a so-called liquidity pool near $123.2k, where an imbalance in the chart would need to be retraced for the market to regain momentum. Conversely, bids around $118,500 account for potential near-term support if a pullback materializes. Popular traders have flagged these zones as critical for determining the next leg of the trend.

Momentum signals and bear indicators
On the technical side, bearish momentum signals have begun to surface. Daily and weekly RSI divergences suggest that higher prices could encounter selling pressure if momentum fades. In particular, the market has seen bearish divergences on longer timeframes, even as BTC tests fresh highs near $124,500 in intraday trading. The four-hour RSI already sits in overbought territory, reinforcing expectations for a pause or a pullback in the near term.

What traders are watching
Industry observers note that a so-called leverage flush could unfold over the next one to two weeks. Analyst BitBull suggested that a surge in open interest and liquidations during this period may shake out weak hands, after which Bitcoin and major altcoins could rally again toward new highs.

Bottom line
The market remains poised for a possible squeeze, driven by record open interest and evolving liquidity dynamics. Traders should remain aware of bearish divergences and short-term overbought conditions, which can precede pullbacks before a fresh upside move.

Disclaimer: This article is not investment advice. Traders should conduct their own research before making decisions.