A fast improve within the quantity of leverage coming from the bitcoin (BTC) futures market might imply that both a brief or lengthy squeeze shall be seen “within the extra instant time period,” based on on-chain analytics agency Glassnode.

“While futures open curiosity continues to be a way off all-time-highs, fast will increase in leverage can point out a clustering of stop-losses and liquidation ranges in shut proximity to the present worth,” Glassnode wrote in its final The Week Onchain report for 2021.

It added that this improve in leverage “provides larger possibilities to a possible brief, or lengthy squeeze within the extra instant time period.”

In the meantime, one analyst indicated at the moment that the present market circumstances make a bearish lengthy squeeze extra possible than a brief squeeze.

“Now funding rising the previous few hours as worth grinding down..,” bitcoin analyst at mining agency Blockware Options, Will Clemente, stated, including that these circumstances are extra favorable for a protracted squeeze than a brief squeeze.

A leverage squeeze refers to an occasion the place worth strikes shortly both down or up, with the transfer exacerbated by leveraged merchants whose buying and selling positions are getting liquidated as worth strikes in opposition to them. A protracted squeeze refers to quickly falling costs, whereas a brief squeeze refers to quickly rising costs.

And whereas Glassnode did warn that there’s a danger of a leverage squeeze within the close to time period, the agency additionally famous that buying and selling volumes within the bitcoin futures market have gone down.

The autumn in buying and selling quantity has been notably notable in December, with the 7-day shifting common of the quantity now being 16% under the extent at the start of the yr.

“Thinner quantity, and rising open curiosity (in a concentrated change) is a mixture that may be favorable to a minimum of a localized leverage squeeze over the approaching weeks,” the report stated, though it admitted that decrease buying and selling exercise is often seen in the direction of the tip of the yr.

At 08:25 UTC, BTC stood at USD 49,426, down 3% over the previous 24 hours and up 5% over the previous 7 days.
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