Bitcoin Rebounds After Weekend Selloff as Laser Digital Flags Short-Squeeze Risk

Bitcoin demonstrated a notable rebound on Monday, regaining ground after experiencing a sharp weekend selloff that saw the world’s largest cryptocurrency dip to new local lows near $93,000. This recovery has drawn attention from market analysts, particularly Laser Digital’s Derivatives Trading Desk, which highlights the potential for a short squeeze to fuel further upward movement.

Bitcoin’s Weekend Decline and Monday’s Rebound

The cryptocurrency market witnessed significant volatility over the past weekend, culminating in Bitcoin’s price falling to approximately $93,000. This downturn, which pushed the digital asset to its lowest level since May, occurred without a clear, immediate catalyst. However, as traditional equity markets opened modestly stronger on Monday, Bitcoin’s spot prices quickly retraced back toward Friday’s closing levels.

Laser Digital, a part of the Nomura Group, observed that the reduction in spot-driven selling pressure allowed the market some room to stabilize after a tumultuous few sessions. Despite this immediate stabilization, the overall derivatives positioning suggests that the market remains in a fragile state, with Bitcoin’s next major price movement likely dependent on its ability to reclaim key psychological and technical levels in the coming days. The Crypto Fear & Greed Index plummeted to 10, indicating “extreme fear” among investors, a level not seen since February 2025.

Derivatives Market Dynamics and Short-Squeeze Potential

Analysis from Laser Digital’s derivatives desk indicates that the recent downward move was largely driven by selling in perpetual futures (perps) rather than extensive spot liquidations. A significant amount of open interest was added during the selloff, a characteristic often associated with perp-led pressure. This dynamic has created conditions that are potentially ripe for a short squeeze if prices begin to climb.

A “short squeeze” occurs when a cryptocurrency’s price increases, forcing traders who have bet against it (short sellers) to buy back the asset to limit their losses. This buying activity further pushes the price up, creating a cascading effect. Data from liquidation heatmaps reveals a heavy concentration of short-side leverage at current price levels, suggesting that many bearish positions could be vulnerable. According to Laser Digital, a sustained push above $98,500 would be a critical confirmation for bulls and could trigger substantial short covering, leading to a rapid price increase.

While trading volumes remain elevated, they are slightly below previous highs. Risk reversals in the options market continue to favor puts, and the options term structure remains steep, reflecting a defensive posture that has characterized crypto markets throughout November. For traders looking to express a bullish outlook, Laser Digital suggests that owning front-end topside optionality may be a cleaner expression. They note that short-dated gamma could perform well if forced liquidations accelerate, and call options continue to trade at a relative discount under current market skew.

Macroeconomic Influences and Upcoming Catalysts

Beyond crypto-specific market flows, the broader macroeconomic landscape presents a mixed picture. Delays in key U.S. economic data releases, such as nonfarm payrolls (NFP) and the consumer-price index (CPI), due to a government shutdown, have left the market operating with incomplete information. The Bureau of Labor Statistics has yet to provide clear guidance on the timing of these updated releases, contributing to market uncertainty.

Broader investor sentiment was also impacted by Meta’s October 29 earnings report, which intensified concerns that extensive AI-related capital expenditure might transition from being a growth driver to a potential drag on technology sector margins. This shift in perspective has contributed to a cautious risk appetite across both equity markets and digital assets. Furthermore, the odds of a December rate cut by the US Federal Reserve have significantly diminished, from about 70% last week to approximately 50%, further dampening investor confidence.

Looking ahead, this week’s major catalyst is Nvidia’s earnings report, scheduled for Wednesday. Given Nvidia’s increasing role as a barometer for AI spending and enterprise technology demand, Laser Digital anticipates that its results could significantly influence the broader macro environment, with potential ripple effects on Bitcoin’s momentum and volatility.

Conclusion

Bitcoin’s recent rebound following a significant weekend selloff underscores the dynamic nature of the cryptocurrency market. While the immediate recovery provides some relief, the underlying market structure, as highlighted by Laser Digital, suggests that derivatives positioning could trigger a substantial short squeeze if Bitcoin reclaims key resistance levels, particularly around $98,500. The interplay of technical indicators, derivatives positioning, and evolving macroeconomic factors, including delayed U.S. data and upcoming earnings reports from major tech players like Nvidia, will likely dictate Bitcoin’s trajectory in the near term. Traders remain vigilant, observing whether bearish vulnerabilities can translate into a sustained upward movement, driven more by market mechanics than fundamental shifts.