The derivatives strategist who is closely followed expects Bitcoin to make its next big move with a brutal short squeeze before reversing into a punishing “long trap” as October opens—a sequence he argues rhymes more with late-2023 than with the euphoric blow-offs of March and December 2024.
Analyst Nik Patel, @cointradernik said that the current position backdrop was discussed in a post on 12 September and expanded during the weekend. “is less like March and Dec ’24 crossovers and more like Dec ’23,” Warning: the market has been set up to fail “multi-week whipsaw going into early/mid Oct.” He also added a liquidation plan: “Give me $1.5bn in shorts liqs on the weekly and then $2.8bn of long liqs into Oct 7th pls.”
— Nik (@cointradernik) September 12, 2025
What’s different about Bitcoin this time?
This setup is different in that it balances spot flows with derivatives and has a wide range of basis trading. “Spot vol as % of total vol [is] lower here than prior crossovers for Others OI vs BTC OI (March ’24 and Dec ’24),” argues that the spot market is truly driving demand “we should expect spot vol as a % of total vol to be higher not lower.”
Related Reading
He sees instead “a combination of basis trade across a broader range of markets than just BTC & ETH but also more directional levered shorts than prior occasions,” With the immediate “upside risk… even greater for a short liq cascade first.” The funding, he said, is “benign” The peak is higher than the previous peaks.
The data on real-time financing are largely in line with the “benign” characterization. Across major venues, BTC perpetual funding hovered close to flat in recent sessions—generally in the +0.005% to +0.01% per-8-hour range—well below the overheated prints typical of euphoric tops. It allows for the possibility of a short squeeze, without needing to deleverage extreme leverage.
Nik said that the closest thing to emotion is sentiment. “disbelief” He said that euphoria is more than just a feeling. He contrasted the ETF frenzy of March 2024 and the post-election optimism in December 2024 with today’s more cautious tone. Both prior crossovers saw stablecoin dominance at around 5%. We are currently at 6.1% — imo this is textbook disbelief/Sidelined September positioningHe wrote.
Once the whipsaw is played out, this war chest will fuel his year-end risks. “We will almost certainly get the positioning whipsaw and bear trap during that quarterly end & monthly open window of weakness, but there are a lot more stables ready to be deployed here into year-end.”
Nik, in a self aware aside shared even a machine generated distillation of what he thought: “ChatGPT coming to a similar conclusion here after I fed all these charts in, idk if that inspires confidence or concern about my view though lol.”
Related Reading
ChatGPT is a written by: “Past crossovers: signaled end-phase altseason blowoffs, fueled by euphoric longs with no dry powder left. This crossover: signals pre-phase potential — leverage is already there, but it’s balanced/shorter, with capital still on the sidelines (stables). This is why the funding differential is so important: • High funding + low stables = top-like conditions. Low funding + high stables = squeeze-ready conditions.”
Renowned crypto expert CRG (@MacroCRG). consented: “Agree with him that a big short liq event is likely before a big long liq event still lots of positioning to unwind imo from ppl expecting a bearish September. In saying that, would like the coins to bounce soon, many are at/near key pivots.”
The trigger is important as always with derivative tapes that are path dependent. Nik warned about the dangers of a “massive short liquidation event” The coming week may be a turning point if the invitations are received. “late longs” The funding spikes into October. His base case would still be the same if not for that unexpected shift: an upside liquidation cascade Then, the longs will be pushed back into the window of October 7, followed by an adjustment to shorts.
The traders who are looking for confirmation should be focusing on the following: whether or not funding is contained when prices rise, whether participation in spot markets actually increases rather than decreases and whether or not stablecoins reduce the cushion of cash he mentions.
Bitcoin is currently trading at $114.852.
Featured image was created with DALL.E chart by TradingView.com
“This article is not financial advice.”
“Always do your own research before making any type of investment.”
“ItsDailyCrypto is not responsible for any activities you perform outside ItsDailyCrypto.”
Source: www.newsbtc.com
