Bitcoin Soars Above $85,000 as Short Squeeze and Macro Factors Fuel Rally

Bitcoin's price surged above $85,000 on September 21, marking its biggest move since January. This sudden jump caught short sellers off guard, with forced liquidations kicking in quickly across major exchanges.

Roughly $300 million in short positions were forcefully bought back within an hour, pushing prices to an eight-month high of $85,257. The surge was also fueled by macro factors, including falling crude oil prices and easing US Treasury yields.

Institutional ETF buying added extra weight, with US spot Bitcoin ETFs seeing nearly $600 million in fresh inflows over Thursday and Friday. However, the Bitcoin ETF market is not yet showing explosive growth, with a weekly net inflow of $6.2 million on September 20.

Alex Thorn from Galaxy Research noted that Bitcoin's recovery of its 50-week moving average has historically provided strong confirmation that bear-market lows were already in place. However, there is an important caveat: a technical breakout is only a signal and not a guarantee.