Bitcoin plunged 5% to $58,000 during early U.S. trading on Thursday, its lowest level since 2024, before recovering to around $59,400. The broader crypto market also fell, with Ether dropping 5.5% to $1,550 and Solana and Dogecoin seeing similar declines. The selloff was attributed to hawkish signals from the Federal Reserve under new Chairman Kevin Warsh, who indicated a potential rate hike sooner than expected, alongside ongoing concerns about AI capital demands. Despite the downtrend, derivatives data suggests a short-squeeze setup. Open interest rose 0.28% as prices fell, indicating traders are adding to shorts rather than closing them. Funding rates are negative, meaning short sellers pay a premium. Spot order book data shows 6,900 BTC in bids between current price and $50,000, versus only 1,570 BTC in sell orders up to $70,000. This asymmetry creates conditions for a rapid price increase if shorts are forced to cover, potentially triggering a short squeeze.

Key facts

• Bitcoin fell 5% to $58,000, lowest since 2024, then bounced to $59,400.
• Ether dropped 5.5% to $1,550; Solana and DOGE also fell.
• Fed hawkish turn under new Chair Warsh signals potential rate hike soon.
• Open interest rose 0.28% and funding rates negative, indicating crowded shorts.
• Order-book imbalance: 6,900 BTC bids below market vs 1,570 BTC asks above.

KeyAudit data perspective