Bitcoin Valuation Metrics Hit Historic Lows as Short Squeeze Risks Mount

Bitcoin is currently exhibiting signs of being fundamentally undervalued, with technical indicators suggesting that nearly 90% of the potential downside has already been priced into the asset. Market data indicates that short positions established above the $70,000 threshold are increasingly vulnerable to a potential price rebound. Recent futures data reveals a significant shift in market leverage. The weekly change in aggregate open interest fell to -2.46% on Monday, a sharp decline from the 8.9% increase seen on March 31 when prices pushed above $73,000. This contraction suggests a broad leverage reset, where long-side positions were closed without triggering a cascading price collapse, leaving the price stable above $70,000. Funding rates across major exchanges, including Binance, Bybit, and OKX, have shifted from 0.33% on March 31 to -0.1738% by April 13. This negative funding indicates that sellers are currently paying buyers to maintain their positions, signaling a heavy short-side tilt that could fuel a short squeeze if buying demand returns to the market. Long-term valuation metrics further support a bullish outlook. The Puell Multiple Z-Score is at its lowest level in a decade, while the Spent Output Profit Ratio (SOPR) and Market-Value-to-Realized-Value (MVRV) Z-Scores have reached record lows. These indicators suggest that the market has entered an exhaustion phase where most investors are no longer sitting on large profits. While $74,000 remains a tested ceiling for the asset, the current setup suggests that the market has undergone a necessary cooling period. With visible liquidity between $64,000 and $66,000, the stability of the price above $70,000 creates a precarious environment for late short exposure.