Bitcoin started the Thursday U.S. trading session with a sharp decline, falling about 5% to $58,000. That was its lowest level since early 2024. The largest cryptocurrency by market cap has since recovered slightly to around $59,400, still down about 2.5% over the past 24 hours.
The selloff was broad. Ether fell to about $1,550, dropping 5.5%. Solana and dogecoin saw similar losses. The move came as memory chip maker Micron surged after strong earnings, but much of the rest of mega-cap tech slipped, leaving the Nasdaq down 0.4%.
Macro pressure weighs on crypto
Markets continue to digest the capital demands of the AI boom and a surprisingly hawkish turn from the Federal Reserve last week under new Chairman Kevin Warsh. Policymakers signaled that their next move is likely a rate hike rather than a cut, and that hike could come sooner than markets had previously expected. That has put pressure on risk assets across the board, including crypto.
Bitcoin remains in a sharp downtrend that dates back to October. But derivatives data suggests some short-term relief might be ahead.
Derivatives hint at squeeze potential
A liquidation heatmap shows that most clustered liquidation risk sits above current prices, not below. That means a move lower is unlikely to be amplified by forced selling. Instead, the real danger is for traders positioned short. Open interest has risen about 0.28% over the past 24 hours, even as prices fell by roughly 3%. This suggests traders aren’t closing their shorts but are instead doubling down, betting that bitcoin will break below $58,000. Funding rates are also negative, meaning the market is paying a premium for downside exposure.
Order book shows support below
Spot market depth tells a similar story. CoinGlass data shows roughly 6,900 bitcoin, worth about $409 million, sitting in buy orders on the order book between the current price and $50,000. In contrast, there are only about 1,570 bitcoin, worth $93 million, in resting sell orders between the current price up to $70,000. That creates a bullish skew in terms of supply.
When a trade becomes this overcrowded on one side, astute traders and market makers sometimes target that weakness and push price in the opposite direction. That could lead those in shorts to close positions to avoid paying funding or getting liquidated. Whether that plays out this time remains uncertain. The broader trend is still bearish, but the setup for a short squeeze is clearly there.
