Bitcoin Breaks $85K as Short Squeeze and Easing Yields Drive Crypto Rebound

Crypto markets made a significant recovery on Friday, with total market capitalization reaching $3.042 trillion. Bitcoin led the charge, reclaiming the $85,000 level and pushing towards $86,000. The cryptocurrency's advance was accompanied by a sharp move across derivatives markets, with short sellers facing significant liquidations.

Riya Sehgal, a research analyst at Delta Exchange, attributed the rebound to easing US Treasury yields and an aggressive short squeeze. Over $200 million in short positions were liquidated over the past 24 hours, while rising open interest suggested that fresh leverage was also entering the market.

Despite $150 million in Bitcoin ETF outflows, the latest advance was driven more by technical momentum and market positioning than renewed institutional flows, according to Sehgal. Bitcoin is now testing the $86,200-$88,000 supply zone, and sustaining levels above $85,800-$86,200 could strengthen the breakout.