Bitcoin's Recovery Hits Critical Zone as Short Squeeze Hangover Bites

Bitcoin's recovery is facing its most significant test yet as it approaches the $81,000 to $86,000 supply zone. This dense area could determine whether BTC can challenge its early-2026 highs.

The rally has been supported by lower yields, a weaker dollar, and renewed demand for scarce assets.

According to Glassnode, the first pressure point is near $80,800, where long-term holders who endured months of losses may be more willing to sell once their positions return to breakeven.

The same range also contains a concentration of short-liquidation levels left behind after last week's squeeze. This event triggered the largest short-liquidation since 2019 and reduced futures open interest by 11% in BTC terms.

Unlike a rally driven purely by leverage, the latest move has attracted institutional capital, with US spot Bitcoin ETFs recording more than $2.8 billion of net inflows across eight consecutive trading days.