Bitcoin Rally Driven by Short Squeeze Rather Than Fresh Buying
Bitcoin's recent surge to over $72,000 has been driven largely by short covering rather than fresh buying interest, according to data from Coinglass. The crypto asset extended its gains on Thursday after a record squeeze forced bearish traders out of the market.
The open interest in perpetual Bitcoin futures has yet to rebound sharply, suggesting that new long positions are not being established at a rapid pace. This implies that the rally is largely being fueled by investors unwinding their short positions rather than taking on new bullish bets.
Over $3 billion of leveraged crypto positions were liquidated over the past 24 hours, highlighting the magnitude of the squeeze. While this has pushed prices higher in the short term, it remains to be seen whether fresh buyers will enter the market and sustain the rally.