The week begins with a brief Bitcoin (BTC) rally. The asset surpassed $116,000, extending a spike that began on Sunday and defying expectations of a new downturn. According to market data, the upward move, which reached $116,032 before pulling back, was mainly driven by an aggressive liquidation of short positions. The move above $116,000 alone triggered a new wave of forced liquidations valued at $19.15 million, punishing traders who were betting on a decline.
This “short squeeze” comes amid growing open interest (OI), which recently increased from $33 billion to over $36 billion. Approximately 40% of that interest was in short positions, providing the fuel for the climb. Binance was the exchange that led the volume of these liquidations. Despite the rally, analysts note that “short” liquidity has been depleted up to $120,000, making it unlikely that a similar event alone will propel BTC to new all-time highs.
After sweeping the sellers’ liquidity, expectations are now focused on a potential correction towards the liquidity accumulated in long positions. The key levels to watch are between $112,500 and $113,000; a drop into this zone could trigger a new cascade of liquidations, this time affecting “longs.” The BTC volatility index remains at a six-month high, indicating that high-risk trading continues to dominate the market.
Source: https://coinmarketcap.com/currencies/bitcoin/
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