What factors are contributing to the current Bitcoin downtrend?

Bitcoin Downtrend Accelerates: Traders Set Sights on $100K Short Liquidity Opportunities

Introduction

Bitcoin’s latest drawdown is testing bullish conviction across spot and derivatives markets. Yet even as momentum weakens, one target keeps appearing on liquidity heatmaps and options boards: the $100,000 round number. For professional traders, this isn’t just a headline-grabbing figure-it’s a high-value cluster of short stops and option hedges that can magnetize price during sudden squeezes. Below, we unpack the drivers of the downtrend, why $100K remains tactically important, and how crypto-native and institutional desks are positioning into year-end.

Macro and Market Structure: Why the Downtrend Picked Up

Bitcoin is increasingly macro-sensitive, and 2024-2025 reinforced that link. Elevated real yields, a stronger dollar, and periodic risk-off episodes have pressured crypto beta even as adoption widened via spot ETFs and institutional custody.

• Post-halving miner dynamics: April 2024’s halving cut issuance, increasing sensitivity to miner treasury management. Miner distribution into weak liquidity pockets can exacerbate sell-offs.
• ETF flow cyclicality: U.S. spot Bitcoin ETFs concentrated inflows in bursts. Outflow days (or simply muted inflows) reduce passive bid support, amplifying volatility.
• Derivatives leverage: High open interest versus market cap turns dips into liquidation cascades when funding flips negative and spot cannot absorb sell pressure.
• Liquidity fragmentation: Offshore perps, CME futures, and onchain perps (e.g., dYdX, GMX, Hyperliquid) create reflexive feedback loops as funding, basis, and skew swing.

Why $100K Short Liquidity Still Matters in a Drawdown

Even during bearish legs, order books and liquidation heatmaps show persistent liquidity pools above price at psychological round numbers, with $100K being the largest magnet. As of 2025, Bitcoin has not sustainably established a market above $100K, making it both a target for leveraged stop clusters and a focus for option hedging.

Three reasons $100K is structurally important

1. Stop density: Short sellers frequently anchor stops at major round numbers. If price accelerates upward, forced buy-backs create a feedback squeeze.
2. Options hedging: Dealers short calls near $100K delta-hedge dynamically. Rapid spot moves can trigger hedging demand, adding fuel to squeezes.
3. Narrative gravity: “Six figures” is a milestone watched by discretionary funds and retail alike, increasing order flow sensitivity if momentum turns.

Paradoxically, the stronger the downtrend, the more concentrated upside liquidity can become above price-setting the stage for violent mean-reversion rallies if catalysts align.

Signals to Watch: Derivatives, On-Chain, and ETF Flows

In a trending market, focusing on a handful of high-signal indicators can help separate noise from regime shifts.

On-chain context

• Realized price bands and MVRV: Extended drawdowns that compress MVRV toward long-term holder cost bases historically precede rebounds.
• Long-term holder supply: When LTH supply stops rising and begins to distribute, rallies can be capped; re-accumulation often precedes durable uptrends.

Trading Playbook: Navigating the Downtrend and the $100K Squeeze Setup

Professional desks plan for both continuation and squeeze scenarios. The following frameworks are widely used across centralized and onchain venues.

Continuation (trend-following) tactics

• Use systematic triggers: 20/50/200-day MA alignment and daily trend filters to avoid catching falling knives.
• Track liquidity pockets: Fade into support only where bid liquidity is proven (spot-led bounces, positive CVD).
• Basis trades: Short perps/long spot on positive basis; flip when funding turns negative to avoid bleed.

Squeeze-aware tactics toward $100K liquidity

• Map liquidation clusters: Overlay heatmaps from multiple venues; note confluence near round numbers and prior highs (e.g., the 69-73k ATH zone).
• Options hedges: Own upside convexity via call spreads or call calendars to capture violent spikes with defined risk.
• Staggered take-profits: If long into a squeeze, scale out into liquidity bands (previous highs, options strikes, round numbers).

Risk controls for both paths

1. Position sizing: Keep VAR within tolerance; reduce leverage when OI/MC is elevated.
2. Time-of-day liquidity: Avoid adding size into illiquid sessions where wicks are common.
3. Venue diversification: Split exposure across CEX, CME, and reputable onchain perps to mitigate idiosyncratic risks.

Scenarios for the Next Leg

• Bearish continuation: Weak ETF flows, strong dollar, and miner distribution push BTC toward prior value areas; funding remains negative but orderly.
• Mean-reversion squeeze: A macro dovish surprise, strong ETF inflows, or a short-covering cascade flips momentum; price runs through stacked stops into the $69-73k band and, if momentum persists, eyes the $100K liquidity pocket.
• Chop and rebuild: Vol compresses; options sellers dominate; realized volatility falls until a new catalyst breaks the range.

Conclusion

Bitcoin’s accelerated downtrend underscores how macro conditions, ETF flow cycles, and leverage interact to drive reflexive moves. Even with momentum pointing lower, the $100K region remains a meaningful short-liquidity target-less as a near-term price call and more as a structural magnet for future squeezes. For traders, the edge lies in tracking leverage and flow, hedging tail risk, and preparing for both continuation and abrupt reversals. In crypto’s current market structure, the best time to plan for a $100K squeeze is often when sentiment makes it seem least likely.