Finance

Bitcoin’s Bear Trap: Will a Short Squeeze Ignite a Bull Run?

Bitcoin may see a short squeeze, says trader. Bears lured into trap, leading to potential upward movement.

September 5, 2025, 11:08 AM

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Executive Summary

Trader Luca forecasts a “major short squeeze” for Bitcoin, suggesting the current correction is a “bear trap” designed by market makers to consolidate and lure short sellers.

This strategy aims to keep Bitcoin’s price rangebound to encourage short positions, leading to a large-scale liquidation event when the price eventually breaks out.

Bitcoin recently returned to the $113,000 level, accompanied by $100 million in short liquidations, which some analysts interpret as a confirmed breakout from the mid-August correction.

The Story So Far

The current volatility and conflicting predictions in the Bitcoin market are rooted in its ongoing consolidation phase after reaching all-time highs, with some traders believing market makers are strategically setting a “bear trap” by keeping prices range-bound to encourage short positions, thereby creating conditions for a major short squeeze, while other analysts anticipate further downside based on different technical indicators.

Why This Matters

The current Bitcoin market appears to be poised for significant volatility, with some analysts predicting a “major short squeeze” stemming from a deliberate “bear trap” set by market makers. This suggests that price movements may be strategically engineered to liquidate short positions, rather than purely organic, creating a highly uncertain and potentially risky environment for investors as conflicting expert opinions point to both substantial upside potential and the possibility of further downside.

Who Thinks What?

Trader Luca suggests that Bitcoin’s current correction is a strategic “bear trap” set by market makers to encourage short selling, which will ultimately lead to a major short squeeze and significant upward movement.

Many other market participants hold a contrasting view, expecting new lower lows for Bitcoin based on bearish divergences in leading indicators.

Trader and analyst Rekt Capital, along with some analysts, interpret recent price action and short liquidations as a confirmation of a breakout from the mid-August correction, indicating a continuation of the upward trend.

Bitcoin may be poised for a significant upward movement in the coming weeks, as market makers are reportedly setting a “bear trap” that could lead to a major short squeeze. According to trader Luca, the current correction from all-time highs is not necessarily a bearish signal but rather a strategic consolidation phase designed to lull short sellers into complacency, a pattern he suggests has been observed in past market cycles.

Trader Forecasts “Major Short Squeeze”

The forecast, shared by trader Luca this week, suggests that Bitcoin’s recent price action is repeating a pattern seen during a massive consolidation phase in a past market cycle, specifically referencing a breakout in November. Luca argues that the absence of fresh higher highs is a deliberate tactic to protect short positions in the short-term.

This strategy involves market makers keeping Bitcoin’s price artificially rangebound. The goal is to convince short sellers that their bets against the cryptocurrency will be profitable, thereby increasing their positions. The longer this scenario persists, the more complacent bears become, creating ideal conditions for a large-scale liquidation event.

Contrasting Market Views

While Luca anticipates a bullish breakout, many other market participants hold a contrasting view, expecting new lower lows for Bitcoin. These analysts often point to bearish divergences on leading indicators, with some suggesting a downside target of $100,000.

Despite these bearish predictions, recent market data indicates some bullish momentum. Bitcoin (BTC/USD) returned to the $113,000 level on Friday, accompanied by approximately $100 million in crypto short liquidations over a 24-hour period, according to CoinGlass data.

Recent Breakout Confirmation

Some analysts interpret this recent price action as a confirmation of a breakout from the correction that began in mid-August. Trader and analyst Rekt Capital, for instance, informed his X followers that Bitcoin had “technically fully confirmed its breakout.” He added that a daily close or retest of the ~$113k region would ensure further upward trend continuation.

In summary, the Bitcoin market is currently characterized by conflicting signals, with some analysts predicting a major short squeeze driven by a deliberate bear trap, while others anticipate further downside. Recent price movements and short liquidations add complexity to the near-term outlook, suggesting significant volatility ahead.