Bitcoin Shorts are up for a Squeeze as Traders Eye $80,000 Reclaim

Bitcoin (BTC) starts the final week of May with traders optimistic about an $80,000 rebound — will it end up as a liquidity grab?

• Bitcoin recovers from its trip to monthly lows as shorts above $80,000 could get squeezed next.
• Excitement is growing over a US-Iran peace deal, and stock markets are already heading to record highs.
• Inflation pressures remain a headache for the Federal Reserve as PCE data for April is released.
• Binance has seen conspicuously high net BTC inflows over the past ten days and has added 16,000 BTC in a month.
• Bitcoin faces multiple bearish catalysts, research warns, predicting a “large liquidation event” as a result.

Bitcoin shorts face “significant” pressure at $80,000

Bitcoin price action struggled over the weekend, dipping below $75,000 to its lowest levels since mid-April, per data from TradingView.

A rebound then brought $77,000 back into focus in line with optimism around a US-Iran peace deal.

BTC/USD one-hour chart. Source: Cointelegraph/TradingView

In its latest market commentary, X analytics account Cryptic Trades called the dip a “fakeout,” noting its proximity to Bitcoin’s lowest levels of 2025, also seen in April that year.

“We saw a brief deviation below the high-timeframe support range aligning with the April 2025 bottoming formation,” it summarized.

BTC/USD one-day chart. Source: Cryptic Trades/X

Cryptic Trades said that BTC/USD needed to reclaim its daily bull market support band — a “strong reversal zone over the last couple of months” — in order to have a bullish bias on low time frames.

“Bulls need to keep holding this area to keep this short/mid timeframe momentum in their favor,” trader Daan Crypto Trades agreed.

BTC/USD one-week chart. Source: Daan Crypto Trades/X

Trader and analyst Lennaert Snyder referred to Bitcoin’s trip below $75,000 as a “very nice liquidity sweep.”

“Strong daily close after the sweep and price is taking out the previous daily highs,” he told X followers. 

“I’m intraday bullish on Bitcoin, and I’m still eyeing that 79/80 level to retest. Would be great if the 74.2K low could get us there, I’ll watch 79/80K closely for quality shorts after my trigger.”

Trader CW also eyed exchange order-book liquidity for clues as to how high the price might go next.

“$BTC has risen to just before the high-leverage short position zone. The upcoming rise will be a liquidation process for short positions,” they predicted. 

“There is a significant amount of short position pressure until 80.5k.”

BTC liquidation heatmap. Source: CW/X

Iran peace deal bets send stocks to new highs

There may finally be some good news for risk assets when it comes to the US-Iran war this week.

A peace deal between the two sides seems closer than ever, and markets are already pricing in the end of the conflict.

US stocks futures surged at the weekly open, with both the S&P 500 and Nasdaq 100 hitting new all-time highs. Japan’s stock market gained 3.5%.

S&P 500 futures vs. Nasdaq 100 futures one-hour chart. Source: Cointelegraph/TradingView

Oil, by contrast, began to fall, with WTI crude nearing $90 per barrel. 

CFDs on WTI crude oil one-day chart. Source: Cointelegraph/TradingView

In a post on Truth Social, US President Donald Trump pledged to make a deal that was “good and proper.”

“Unlike those before me who should have solved this problem many years ago, I don’t make bad deals!” he wrote.

Source: Truth Social

Bitcoin’s response was more muted, continuing a trend from last week where stock market records failed to ignite upward momentum for crypto.

Nonetheless, market participants are already betting on the peace deal acting as the next tailwind.

“I think Bitcoin is ready for higher grounds,” trader and analyst Michaël van de Poppe commented on X.

Van de Poppe saw BTC/USD rising above $80,000 should a deal take effect.

“That is likely the plan,” he concluded, seeing risk assets performing strongly across the board.

BTC/USDT one-day chart. Source: Michaël van de Poppe/X

Inflation flips Fed hawkish ahead of PCE data

The deal would also mean good news for US inflation trends, which have surged on the back of high oil prices.

This week, however, both markets and the Federal Reserve will have to contend with April’s Personal Consumption Expenditures (PCE) Index print, which will reflect the full impact of the Iran conflict.

PCE, known as the Fed’s “preferred” inflation gauge, will be the first for its new Chair, Kevin Warsh.

US PCE % change (screenshot). Source: Bureau of Economic Analysis

Expectations remain that policy could tighten to contain inflationary pressures this year. In the latest edition of its regular newsletter, “The Market Mosaic,” trading resource Mosaic Asset Company noted that even Fed officials themselves were changing their tone.

“In a speech last week, Christopher Waller stated that ‘inflation is not moving in the right direction’ and can ‘no longer rule out rate hikes further down the road,’” it reported, referring to a member of the Fed Board of Governors. 

“Waller previously was a leading proponent for cutting rates on labor market concerns.”

Fed target rate probabilities (screenshot). Source: CME Group

Data from CME Group’s FedWatch Tool likewise underscores the lack of optimism when it comes to interest-rate cuts before 2027.

While that is ostensibly a headwind for crypto, Mosaic acknowledged that Iran-based inflation upticks could be “temporary,” with stocks primed for further gains.

Binance inflow “intensity” causes alarm

Geopolitical uncertainty has led onchain analytics platform CryptoQuant to warn about a Bitcoin “sell signal.”

In one of its QuickTake blog posts on Sunday, contributor Darkfost flagged nearly 10 days of BTC inflows to the largest global exchange, Binance. 

“On May 16th, the weekly average of inflows on Binance stood at 378 BTC. It now reaches 1,190 BTC today, representing a more than 3x increase in less than 10 days,” he revealed. 

“The largest single day recorded over 3,600 BTC on May 18th, a relatively high level for a single day that clearly illustrates the intensity of the movement.”

Bitcoin netflows for Binance. Source: CryptoQuant

Darkfost noted that Binance’s Bitcoin reserves had increased by 16,000 BTC in a single month.

“When inflows become dominant and consistent on a platform like Binance, this is traditionally interpreted as a potential sell signal,” he continued. 

“Holders transferring their BTC to an exchange most often do so with the intent to sell, whether it be profit taking, reducing exposure, or a more defensive repositioning.”

Last week, Cointelegraph reported on weak US demand causing consistent downside price pressure after the Wall Street open. The Coinbase Premium Index, which measures the difference in price between Coinbase’s BTC/USD and Binance’s BTC/USDT pairs, hit its largest negative values in several months.

Analysis warns of “large liquidation event”

In further bad news for Bitcoin bulls, CryptoQuant contributor XWIN Japan described a cocktail of hurdles that remain unconquered.

Related: Bitcoin price record 90-day uptrend ‘resembles bull market rally:’ New analysis

In addition to the weak demand, institutional capital has been exiting the US spot Bitcoin exchange-traded funds (ETFs).

“US spot Bitcoin ETFs have now seen more than $1.74 billion in cumulative outflows, while the Coinbase Premium has turned deeply negative. Since this metric is often viewed as a proxy for US institutional spot demand, it suggests that large investors are becoming less active buyers,” a QuickTake post read.

Bitcoin Coinbase Premium Index. Source: CryptoQuant

Binance’s netflows, meanwhile, come as stablecoin volumes decrease — a sign of waning liquidity and reduced risk appetite.

Traders who remain active, by contrast, are “aggressively long,” and positive funding rates imply that leverage is becoming more popular.

“The problem is that Open Interest remains well below late-2025 highs. This suggests the recent rebound is being supported more by leveraged futures activity than by strong spot demand,” XWIN explained.

Bitcoin open interest-weighted funding rate (screenshot). Source: CoinGlass

Looking ahead, this combination of factors suggests that the market is due for a shakeout.

“Historically, periods with ETF outflows, negative Coinbase Premium, weak spot demand, and crowded longs have often preceded large liquidation events,” the post concluded. 

“For now, Bitcoin looks less like a healthy bull market and more like a fragile rebound driven by leverage rather than real demand.”