Analyst warns BTC rebound lacks spot demand, raising long squeeze risk

Although Bitcoin has rebounded, it is difficult to consider it a trend reversal amid declining spot trading volume, according to cryptocurrency analyst Murphy (@Murphychen888) on X. He explained that the current rise, without the support of spot demand, is merely a rebound, and its future sustainability must be watched. On the positive side, Murphy noted that the price of USDT relative to USDC has fallen from 1.001 to 1.0006, suggesting traders do not intend to leave the market. The decline in major stablecoin balances on exchanges is also slowing. However, he added that with reduced spot volume, the derivatives market's influence has grown. While open interest (OI) has slightly decreased as some long positions took profits, it remains high compared to February levels. Market buy pressure is keeping futures prices above spot prices. "While it is common for long positions to lead the perpetual futures market, the longer this situation persists, the greater the risk of a long squeeze," he said. The analyst previously noted on July 4 that a move by BTC above $70,000 could increase the likelihood of a trend reversal.