#079 Shorts Trapped at $80K: The Perfect Squeeze Setup

I'll be honest - Bitcoin at $79,640 looks weak on the surface. Price down, alts bleeding, Twitter in full panic mode.

But I'm seeing something completely different in the data.

Onchain Edge Index: 34.23

let’s dive in.

Trump's Tariffs + Bitcoin

Trump's "Liberation Day" tariffs shocked the markets last week. Bitcoin immediately dumped with stocks, which isn't surprising. Tbh Everything dumped.

What's interesting is what happened next.

I've been tracking exchange flows and noticed something that most traders are missing:

• 30-day exchange outflows: -$2.50B

• Coinbase alone: -8,707 BTC in 24h

• Meanwhile, ETF outflows accelerating

When retail panics about tariffs, smart money accumulates. I've seen this pattern in every mid-cycle dip since 2016.

The Capitulation Pattern I've Been Waiting For

https://kiklex.co.uk/XthSOPRShortTermHolderCoin.html

Here's the metric I've been waiting months to see:

STH SOPR has dropped to 0.97, falling below the critical 1.0 level.

In plain English: newer Bitcoin buyers are now selling at a loss. They bought high and are selling low - classic emotional behavior.

Meanwhile, long-timers (LTH SOPR at 2.1) are still selling at 110% profit when they choose to exit.

The gap between these two metrics (1.13) is nearly identical to what we saw in December 2023, right before the halving pump.

Derivatives: A Squeeze Brewing

The funding rate situation is wild right now. BTC OI-weighted funding is just 0.0085% - practically zero.

On Hyperliquid Shorts are dominating (53.84% vs 46.16% longs) and they're profitable (+$133.04M), while longs are underwater (-$36.14M).

Total leverage in the system: $1.61B

From experience, this is the perfect short squeeze setup. When everyone's already short and winning, there's nobody left to sell.

I've been tracking whale movements on Hyperliquid and saw some interesting patterns:

• 0xa4 closed a $8.01M short at $80k

• 0xcdc7 closed $4.5m short at $79k

Smart whales are positioning for volatility.

The Strongest Signal Right Now

[CHART: Active Addresses vs Price] Chart link: https://kiklex.co.uk/ActiveAddresses.html

This is my favorite bullish divergence: (even if you can’t see it on the chart above)

Bitcoin price: Down 23% from ATH Active addresses: Holding steady at ~1.2M Transaction volume: Actually increasing to ~120M BTC

I've been through enough cycles to know what this means. In true bear markets, network activity collapses with price.

Mid-Cycle, Not Market Top

[CHART: MVRV Z-Score] Chart link: https://www.bitcoinmagazinepro.com/charts/mvrv-zscore/

The MVRV Z-Score is one of my favorite cycle indicators, currently at 1.52.

For context:

• Market tops typically hit 7+

• Bear bottoms fall below 0

We saw similar readings in Q2 2021 and Q3 2017, both mid-cycle before the biggest moves up.

We're nowhere near bubble territory - just a healthy shakeout.

Old Coins Staying Put

[CHART: Bitcoin Days Destroyed] Chart link: https://kiklex.co.uk/AddressBandBDD7.html

I always check what the oldest Bitcoin holders are doing during market panic.

There's a recent uptick in Bitcoin Days Destroyed, but it's only in the 1,000-10,000 BTC whale band.

The "Humpbacks" (holders of 10,000+ BTC) show almost no movement.

These OGs have seen plenty of macro FUD before. They're not selling.

Macro Setup: Better Than You Think

The Trump tariff situation seems bad on the surface, but look at what's brewing:

• Atlanta Fed showing -2.8% GDP contraction

• Inflation forecast up to 2.7%

This is basically a stagflation scenario - historically Bitcoin's best environment.

Remember, the Fed already started cutting rates last September. The first cut of a cycle typically adds 20-30% to Bitcoin within 6 months.

The Battle Zone That Matters

[CHART: Liquidation Map] Chart link: https://www.coinglass.com/pro/futures/LiquidationMap

Here's where the real action is happening:

$450M in long liquidations clustered at $75K-$77.5K $400M in short liquidations clustered at $80K-$83K

And we're sitting right between them at $79,640.

This creates a perfect volatility setup - price will eventually get pulled to one of these clusters, triggering a cascade.

I chart all these trends on TradingView, which has the best tools for combining technical and on-chain data.

And if you are trading here’s a really nice free liquidity heatmap

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