Ahead of the US midterm elections taking place on November 03, Bitcoin traders are closely monitoring two conflicting variables: a record volume of short positions on the CME derivatives exchange and a wave of asset withdrawals into self-custodial cold wallets.
The market has just weathered strong turbulence following the net withdrawals from Binance and derivatives liquidations such as the recent Bitcoin short squeeze pressure.
A $2.2 billion short position and the prospect of a squeeze
According to analysis from Chris Sullivan, founder and CEO of Hyperion Decimus, the CME currently records approximately 29,220 Bitcoin-equivalent contracts in short positions, representing a value of around $2.2 billion. At the same time, short-side taker volume reached nearly $22 billion within 24 hours.
This structure opens up the possibility of a short squeeze if Bitcoin’s price rebounds, forcing traders betting on a decline to buy back and cover their positions. However, interpreting this data has become more complex due to capital flows shifting after recent industry security incidents.
Exchange outflows and key technical thresholds
On the other hand, large amounts of Bitcoin continue to be withdrawn from centralized exchanges into cold wallets. Sullivan noted that the declining supply of coins readily available for trading on exchanges provides solid medium-term support for prices, even if this effect may not manifest immediately. To confirm a reversal trend, the 200-day moving average must hold against any short-term corrections.
According to a market report from trading firm QCP Capital, Bitcoin tested the $76,000 to $76,600 support zone for the fourth time and continued to hold this level. On the political front, prediction markets Polymarket and Kalshi are pricing in the likelihood of Democrats winning control of both houses of Congress, a scenario that could slow the passage of the Clarity Act.
Even so, many fund managers argue that the accumulation trend among major financial institutions such as ICE or Robinhood is the true driver governing Bitcoin’s long-term price trajectory.