Bitcoin’s Bounce to $60K Driven by Genuine Buying, Not a Short Squeeze, Analyst Says

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Bitcoin’s Bounce to $60K Driven by Genuine Buying, Not a Short Squeeze, Analyst Says

Bitcoin’s recent recovery to the $60,000 level appears to be fueled by authentic buying demand rather than a short squeeze, according to on-chain analyst Axel Adler Jr. In a detailed analysis, Adler examined key market metrics to differentiate between a temporary squeeze and a more sustainable uptrend.

Key Metrics Point to Buying Pressure

Adler highlighted that the taker buy/sell ratio has remained above 1.0 for eight of the last ten days, indicating that aggressive buyers have been consistently dominating the order books. This metric, which measures the volume of buy orders executed at the ask price versus sell orders at the bid price, has averaged 1.03 since June 6. A value above 1.0 typically signals stronger buying momentum.

Additionally, funding rates in the perpetual futures market have stayed positive for ten consecutive days. Funding rates are periodic payments exchanged between long and short traders to keep the contract price aligned with the spot market. Positive rates suggest that long positions are paying shorts, which is typical in a bullish market environment.

Why This Isn’t a Short Squeeze

Adler argued that the current setup lacks the hallmark of a classic short squeeze. In a squeeze scenario, funding rates typically turn negative before a rebound, as a large number of short sellers accumulate. When the price unexpectedly rises, those shorts are forced to buy back, amplifying the move. However, during this recovery, funding rates never went negative, meaning the market was never heavily skewed toward short positions.

“A short squeeze would have seen funding rates turn negative first, but they stayed positive throughout the decline and rebound,” Adler noted in his post. “This suggests the rebound was driven by new buying, not forced covering.”

Risks of Rising Leverage

While the current data is encouraging, Adler cautioned that the persistent positive funding rates also signal increasing long leverage. If the market overheats—meaning funding rates spike sharply without a corresponding rise in spot demand—it could leave the market vulnerable to a sudden correction.

“A moderate positive funding rate is healthy and indicates confidence,” he explained. “But if rates climb too fast without real demand behind them, it creates fragility. The rally’s sustainability depends on buying pressure continuing without letting leverage get out of control.”

Conclusion

Bitcoin’s move back to $60,000 appears structurally healthier than a short squeeze, driven by sustained buying demand rather than forced liquidations. However, the market remains sensitive to leverage levels. Traders and investors should monitor funding rates and taker volumes closely to gauge whether the recovery has legs or is at risk of overheating.

FAQs

Q1: What is the taker buy/sell ratio?
A1: It is an on-chain metric that compares the volume of buy orders executed at the ask price to sell orders at the bid price. A ratio above 1.0 indicates more aggressive buying pressure.

Q2: What are funding rates in crypto futures?
A2: Funding rates are periodic payments between long and short traders in perpetual futures contracts. Positive rates mean longs pay shorts, typically seen in bullish markets.

Q3: Why does the analyst say this isn’t a short squeeze?
A3: In a short squeeze, funding rates usually turn negative before a rebound as shorts accumulate. In this case, rates stayed positive, indicating new buying demand rather than forced covering of short positions.

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