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Despite Bitcoin (BTC) continuing its sluggish sideways movement, experts are issuing strong warnings that a ruthless market shakeout accompanied by large-scale cascading liquidations may be imminent, as retail traders aggressively engage in dip buying and leveraged bets in anticipation of a price rebound.
According to crypto-focused media outlet Decrypt on February 16, Bitcoin has been trapped in a range between $62,000 and $71,000 since February 6, failing to find a clear breakout. Based on CoinGecko data, the current price stands around $68,600, down about 2.5% from 24 hours ago. However, speculative sentiment and leverage in the market are expanding sharply.
This overheating trend is clearly visible in derivatives indicators. According to Velo data, the three-month futures basis—the price gap between futures and spot—on major exchanges such as Binance, OKX, and Deribit widened significantly from 1.5% to 4% after February 13. Funding rates have also risen, suggesting that speculative forces betting on long positions are dominating the market. Coinbase CEO Brian Armstrong likewise noted that users on his platform have been actively buying the dip during the recent downturn.
In the options market, Deribit’s 25-delta skew (demand for put options relative to calls) rose from -10 to -4, indicating reduced demand for downside protection and growing bullish conviction. Nick Ruck, director at LVRG Research, projected that if broader risk assets maintain stability, a leverage-driven rally and short squeeze—buying pressure triggered by short position liquidations or coverage—could occur. However, he warned that retail investors typically enter the market late and suffer the heaviest losses during liquidations, adding that a short-term bottom is likely to form only after an inevitable flush of excessive leverage sweeps through the market.
Ryan Yoon, chief analyst at Tiger Research, also identified the lack of sufficient trading volume to support the current positive market sentiment as the biggest risk factor. He assessed that this divergence creates an extremely dangerous environment and could trigger mass capitulation and a broad investor exit if sudden downside pressure emerges. According to his analysis, the Bitcoin market currently stands on a razor’s edge between a healthy recovery and complete investor abandonment.
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