Bitcoin dropped below $88K, with traders on Binance increasing short positions in anticipation of further declines.
Kraken traders are “buying the dip”, pushing the long-short ratio to a record high of 0.8.
Despite bullish sentiment on Kraken, high leverage remains, raising the risk of a potential long squeeze.
Bitcoin dropped to a three-month low on Monday, sliding below $88,000, as Wall Street risk aversion picked up and the yen held strong against the U.S. dollar. Traders on Binance rushed to short BTC, with open interest spiking by $1 billion, anticipating further downside.
While some traders are stacking shorts elsewhere, bargain hunters are stepping in on Kraken, pushing the BTC perpetual long-short ratio to a record high of 0.8.
More long positions are being opened than ever before, but the ratio is still below 1, meaning there are more shorts than longs overall.
Open interest on Kraken hit a four-week high, indicating renewed optimism.
Head of derivatives Alexia Theodorou says traders are actively buying the dip, betting on a rebound.
“Despite bitcoin’s price dropping below $90K, Kraken has seen a surge in traders opening long positions,” Theodorou told CoinDesk.
Despite the bullish sentiment among Kraken traders, Theodorou warns that leverage levels are still elevated.
Liquidations remain at normal levels, meaning there’s still excess leverage in the market.
If BTC drops further, a long squeeze could trigger another sharp sell-off.
While dip buyers are stepping in, the broader trend still favors shorts—for now.
“This speaks to the underlying positive sentiment in the market, but it doesn’t mean we’re out of the woods,” Theodorou said.
For now, Bitcoin is at a critical point—either the Kraken bulls get their rebound, or another wave of liquidations pushes BTC even lower.
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Michael is a BSBA Management graduate from Mindanao State University and has been a professional content writer since 2019. He began exploring cryptocurrency in 2021 and has since made blockchain and digital assets his primary focus. For nearly four years, Michael has contributed research and editorial content at Aiur Labs and BlockNews, producing clear and accessible coverage of market trends, trading strategies, and project developments. He is transparent about his personal holdings in Bitcoin, TRON, and select meme tokens, combining writing expertise with hands-on market experience to deliver trustworthy insights to readers.
