Bitcoin [BTC] has retreated sharply after facing rejection near $66,000, while a large amount of capital exited the market during the same period.

After a 4.8% decline pushed BTC lower on the chart, the asset is making another attempt to move above that level. Although optimism among bullish traders has returned, recent liquidation data indicates that the market still carries the risk of another move lower.

Liquidation clusters highlight downside risk

The renewed positive positioning does not eliminate the risk created by liquidation levels on the chart, which could weigh on Bitcoin’s price action. Liquidation cluster analysis shows a concentration of liquidity below the current price, particularly around the $60,000 to $61,500 range.

Liquidity clusters are often monitored because price can move toward areas where orders are concentrated, especially in leveraged derivatives markets where forced position closures can accelerate short-term moves. In this case, that setup leaves open the possibility that BTC could be pulled lower to fill buy orders in the $60,000 to $61,500 zone before any sustained rebound develops.

However, such a move is not guaranteed, especially when measured against the losses incurred by short and long traders over the past day.

Short liquidations totaled $35.56 million, compared with $3.03 million in long-position liquidations. The gap, at about 11.7 times, shows that short traders absorbed significantly larger losses over the period and also highlights the current weight of long exposure in the Bitcoin market.

Funding Rate shows long positioning remains dominant

Bitcoin’s Funding Rate, which indicates whether traders are primarily paying to maintain long or short contracts based on available capital, shows that bullish positioning remains in control.

At the time of writing, the Funding Rate had risen to 0.0067%, indicating that bulls were dominating market positioning. This also suggests that much of the $48.34 billion in open positions was tilted toward long exposure, as traders positioned for a short- to near-term increase in BTC’s price.

The Long/Short Ratio was also near 1.04, pointing to an increase in long volume across Bitcoin’s perpetual market. With ratios on these venues above 1, the data confirms a bias toward long exposure that could support further upside if buying pressure continues. At the same time, crowded long positioning can make the market more sensitive to sudden pullbacks because leveraged positions may be forced to close if price moves against them.

Whale accumulation and Bitcoin scarcity

Bitcoin’s available supply is also showing signs of tightening as whale activity continues to influence the market.

According to one report, a major whale accumulated slightly more than 3,000 Bitcoin, valued at $198 million at the time. The accumulation coincided with Bitcoin’s stock-to-flow ratio rising more than 350% over the past day. The stock-to-flow ratio measures scarcity relative to existing supply and annual issuance.

Such an increase suggests that growing scarcity may be contributing to Bitcoin’s upward movement on the chart. The trend has also been shaped by major market participants, including Bitcoin miners, who have sold less Bitcoin than their one-year average. Miner selling is closely tracked because miners are a recurring source of new BTC supply, so lower-than-average selling can reduce one source of market distribution.

Overall, the data shows two competing conditions: BTC short liquidations exceeded long liquidations by nearly 12 times over the past day, while liquidity clustered around $60,000 to $61,500 remains a potential downside target before any more durable rebound takes hold.