Bitcoin Price Prediction: Polymarket Bets 27% Chance Of $85K Drop As Shorts Get Squeezed

Source: CryptoNewsNet Original Title: Bitcoin Price Prediction: Polymarket Bets 27% Chance Of $85K Drop As Shorts Get Squeezed Original Link: Bitcoin price today trades near $89,463 as the market consolidates within a narrowing range. Prediction markets reflect elevated downside expectations, but derivatives data shows shorts getting squeezed, creating a potential setup for a counter-trend move.

Polymarket Bets On Downside

Prediction markets reveal bearish positioning among traders. Polymarket data shows a 27% probability that BTC drops to $85,000 before January ends, down from 44% earlier this week. The market for a decline to $80,000 sits at 6%, while $75,000 carries just 2% odds.

On the upside, only 4% of bettors expect BTC to reclaim $100,000 this month, with the odds for $105,000 and above falling below 2%. The asymmetric probability distribution reflects the current sentiment where downside risks dominate expectations.

However, prediction market odds have shifted notably in recent days. The $85,000 probability dropped from 44% to 27%, suggesting that bearish conviction is fading even as price remains below key resistance levels.

Shorts Get Squeezed Despite Bearish Sentiment

Derivatives data tells a different story from prediction markets. Over the past 24 hours, $85.33 million in short positions were liquidated compared to just $20.38 million in longs. The 4:1 ratio suggests that bearish positioning has become crowded.

Open interest dipped 1.02% to $58.87 billion while trading volume rose 3.78% to $58.75 billion. Options volume surged 18.15% to $2.87 billion, indicating that traders are paying for volatility protection as the range tightens.

The long/short ratio sits at 0.99, nearly perfectly balanced. Top traders on certain major platforms show 2.37 long/short ratio, suggesting larger accounts lean bullish despite retail caution.

When shorts dominate liquidations during consolidation, it often signals that the bearish trade has become consensus. Consensus trades tend to unwind violently when sentiment shifts.

Price Compresses Between Key Levels

On the daily chart, Bitcoin trades within an ascending channel drawn from the December low near $80,000. Price has bounced from channel support multiple times while failing to reclaim the 20 and 50-day EMA cluster.

Key levels now:

• Immediate resistance: $91,241 (20 EMA)
• Secondary resistance: $91,780 (50 EMA)
• Major resistance: $95,218 (100 EMA)
• Supertrend resistance: $96,483
• Trend resistance: $98,846 (200 EMA)
• Channel support: $88,000 to $88,500
• Breakdown target: $85,000

The Supertrend indicator remains bearish at $96,483, confirming that short-term momentum favors sellers. However, the ascending channel structure suggests the broader recovery trend remains intact as long as support holds.

Intraday Momentum Shows Neutral Conditions

Shorter timeframes reveal the compression dynamics. On the 2-hour chart, BTC has traded between $87,000 and $90,500 for the past four days, making lower highs while support holds firm.

The Parabolic SAR sits at $88,984.79, just below current price. A close below this level would flip the indicator bearish on the shorter timeframe and signal near-term weakness.

RSI sits at 48.03, dead neutral without directional bias. The indicator has oscillated between 40 and 55 throughout the consolidation, reflecting the market’s indecision.

The tight range creates conditions for an eventual breakout. The longer compression continues, the more forceful the resolution tends to be.

Outlook: Will Bears Or Bulls Break The Range?

The setup presents conflicting signals. Prediction markets expect downside, but short liquidations suggest bearish positioning is crowded. The ascending channel provides support, while the EMA cluster caps rallies. Resolution will come when one side capitulates.

• Bullish case: Price breaks above $91,000 and short covering accelerates the move. A close above the 20 EMA targets $95,000 and potentially the Supertrend at $96,483.
• Bearish case: Channel support at $88,000 breaks on sustained selling. A daily close below $88,000 validates the prediction market thesis and targets $85,000.

Bitcoin sits at a decision point where prediction market pessimism meets derivatives positioning that favors a squeeze. The next sustained move will likely be violent as compressed volatility releases.