There is an oversupply of short positions in the Bitcoin market — the next step could be a "market squeeze," according to CryptoQuant contributor under the pseudonym CoinNiel.

Digital gold is being withdrawn from exchanges, while funding rates remain heavily negative — increasing the potential for a short squeeze.

"Short positions dominate the market, and they are paying long positions, and such extreme positioning could trigger a reversal through forced liquidation," added the analyst.

Meanwhile, from April 6 to 10, open interest in shorts increased from approximately $21.87 billion to $24.37 billion. The combination of rising open interest and negative funding suggests that leveraged short positions are rapidly accumulating.

At the same time, the 30-day change in the off-exchange balance has turned negative, and miners have slowed their selling pace. This indicates absorption and holding of Bitcoin by large players outside centralized platforms.