Bitcoin experienced a significant short squeeze over a 24-hour period, resulting in the liquidation of approximately $575 million in total positions, with nearly $500 million coming from short sellers alone. This event was triggered as Bitcoin's price surged toward $70,000 before a slight pullback. The forced buying from liquidated shorts accelerated the rally, creating a spike in perceived market strength.
However, analysts from CryptoQuant caution that such liquidation-driven price spikes do not automatically signify the start of a new bull market cycle. Data indicates that open interest has fallen sharply, suggesting a broad market deleveraging rather than aggressive new long exposure. While exchange flow data shows no major panic selling preceding the bounce, there is also no clear evidence of a structural upward shift in demand.
Technically, Bitcoin's price action saw a rapid move from $64,000 to $71,000, where it faced strong resistance at the top of a descending channel. The price was cleanly rejected at the $71,000 level, putting the focus back on support at $64,000 and potentially $60,000 if that level fails. For bullish momentum to resume, buyers need to defend the $65,000–$66,000 area and establish a higher low before attempting another breakout above $71,000.
In a separate but related development, prediction market Polymarket reveals a cautious trader sentiment regarding Bitcoin's future price. Traders have placed over $20 million in volume on the question "What price will Bitcoin hit in 2026?". The current market odds price the probability of Bitcoin reaching $100,000 in 2026 at roughly 39%, while the odds of it staying above $90,000 are closer to 50%. Significant volume is also being placed on bearish outcomes, including Bitcoin touching the $55,000 range.
This cautious outlook on Polymarket stands in contrast to more bullish analyst predictions, such as Real Vision CEO Raoul Pal's target of $140,000 by 2026. Market observers suggest the current low odds may reflect "recency bias," where traders overweight recent choppy or stagnant price action. Notably, on-chain data shows whales continue to accumulate Bitcoin, creating a divergence with prediction market sentiment that some view as a potential opportunity.
The regulatory environment for prediction markets is also in flux. The CFTC has claimed exclusive authority over these markets in the US, potentially limiting institutional "smart money" participation from American entities. However, a recent court decision blocking action against prediction platform Kalshi signals a potential shift, and improved regulatory clarity could lead to significant changes in the odds displayed on platforms like Polymarket.
