Bitcoin recovers to $86K – Can BTC hold on, or will sellers strike again?

• BTC has made a moderate recovery over the past day, rising by 1.55%.
• Sellers still dominate Bitcoin markets, and it seems a short squeeze has led to a short-term recovery.

Bitcoin’s [BTC] market dynamics have taken a dramatic turn, with sellers dominating the scene as BTC’s Cumulative Volume Delta [CVD] plunges to its most negative level.

This signals intense selling pressure, historically a precursor to further declines. However, a short squeeze may be shifting momentum, triggering a surprise recovery that pushed BTC back to $86,259.

Bitcoin CVD hits highest negative area

Over the past month, Bitcoin has had one of the worst performances over the past years, dropping by 17% in February.

This drop saw BTC hit a 4-month low. However, this trend has reversed, with Bitcoin reclaiming $86259 as of this writing.

Despite this recovery on daily charts, Sellers are still heavily active in the market, as evidenced by the declining CVD.

In fact, Bitcoin’s spot Cumulative volume delta has declined to hit its most negative area.

Such a huge drop implies that the market is executing more sell orders than buy orders, suggesting that more investors are selling their BTC.

Source: Checkonchain

Since CVD usually tracks cumulative sell v buy volume, an extremely negative level indicates that selling momentum outweighs buying, which typically reflects strong market bearishness.

Historically, when sellers dominate the market, further price decline has preceded as Bitcoin struggles to find strong support. This decline resulted in more traders taking short positions as they expected prices to dip further.

However, the sudden demand for shorts seems to have resulted in the reverse effect, resulting in a short squeeze.

Did BTC experience a short squeeze?

While Bitcoin is experiencing higher sell orders, the markets are signaling a short-term recovery. As such, the short-term conditions suggest that BTC could make some moderate gains on its price charts.

This implies that while CVD has reached its highest negative value, it seems Bitcoin has experienced a short squeeze as demand for BTC among traders has gone short and surged.

This led to the price recovery witnessed over the past day.

Source: CryptoQuant

This sudden shift in sentiment arises from a rising demand for Futures. The surge in buy orders evidences the high demand for Futures as traders started going short.

These buyers have entered the market and absorbed the high sell pressure arising from the negative CVD. As such, the Taker buy-sell ratio has turned positive for the first over the past week.

Source: CryptoQuant

Additionally, Bitcoin’s Fund market premium has turned positive, suggesting that the Futures market is more bullish than the spot market.

Thus, Bitcoin traders in Futures are willing to pay a premium fee to hold their positions. This indicates that Bitcoin is currently experiencing a high demand for leveraged positions.

Simply put, Bitcoin has seen sellers dominate the market, which has motivated traders to take short positions.

However, this resulted in a high demand for short positions, resulting in a short squeeze and leading to recovery, as witnessed over the past day.

With the demand for futures rising, BTC could see a short-term recovery to $89.300. However, with sellers dominating the market, if the market shock witnessed over the past day cools down, BTC could drop to $83,400.