Leverage, liquidity, and longs: Setting up an unexpected bullish altcoin rally

Two weeks after reaching a historical peak, Bitcoin (BTC) is once again returning to test the threshold of 105,000 USD – a key price point that is putting significant pressure on market sentiment. In the last breach of this level, BTC plummeted quickly to 100,000 USD. With no clear bottom identified, traders are becoming more cautious and tense than ever.

History shows that in the current uncertain context, capital tends to rotate towards altcoins in search of short-term profits outside the shadow of BTC. However, despite seemingly favorable market conditions, most altcoins are still under strong selling pressure, recording double-digit declines weekly.

According to Bitcoin Magazine, the "altseason" hasn't really started yet. However, with BTC entering a state of hesitation and a fragile market structure, this could be the time for savvy investors to start positioning for a potential reversal.

High Long Ratio Signals Market Rebalancing Potential

Although the spot market has not recorded significant fluctuations, the derivative market is showing signs of preparing for a substantial move.

Data shows that over 70% of altcoins are heavily leaning towards the Long side, and on the Binance exchange, institutional investors are also not hiding their positions: an average of over 60% of trades for large-cap assets are being placed in the Long direction.

However, this is not just a manifestation of optimism, but a risk-taking strategy after the recent large-scale liquidation. Traders are expecting a short-term rebalancing, with the possibility of a "short squeeze" — a situation in which short positions are forced to close as prices rise rapidly, pushing the market even higher.

The Long/Short Ratio chart shows that many altcoins are above the 1.0 level, clearly reflecting the Long bias of the market — a rather risky move in the current volatility.

! Long/ShortSource: AlphractalIf BTC continues to plunge towards $100,000, shorts can take the initiative, especially as new short positions continue to grow. Conversely, if the market maintains stability and overcomes corrective pressure, late short positions will become a "spark" for a strong price squeeze, just as the Long side is betting on.

Currently, the situation remains one of stalemate and the outcome will depend on which side acts more quickly and accurately.

Altcoin may bounce back if Bitcoin stabilizes

With Bitcoin's dominance rate back above 65%, altcoins are still being influenced by BTC's trends. If Bitcoin returns to the 100,000 USD zone, it is likely that altcoins will continue to face downward pressure.

The previous correction clearly demonstrated this: when BTC dropped 9.6% from its peak, Ethereum (ETH) fell even more sharply by 10.25%. The reason is that many altcoins are overloaded with Long positions, leading to increased selling pressure as the market reverses.

Source: TradingViewHowever, Bitcoin Magazine notes that the current cycle is undergoing a marked structural change, making the scenario of BTC plummeting to 100,000 USD less likely.

If Bitcoin maintains stability, it is likely that altcoins will lead the recovery – especially if a "short squeeze" occurs and drives growth momentum.

Instead of panicking at this adjustment pace, investors can view this as a strategic opportunity to enter the market early, anticipating a potential breakout phase in the near future.

Mr. Giáo