Bitcoin (BTC) has staged a sharp rally, breaking above the $67,000 mark and triggering a massive short squeeze that wiped out over $198 million in bearish positions within 24 hours, according to data from Coinglass. The move came just hours after the same analytics platform highlighted a critical liquidation threshold at $66,365, where more than $376 million in short positions had been concentrated.
The derivatives data shows that short liquidations completely dominated the move, accounting for a staggering 93% of the $213.54 million in total liquidations over the past day. Specifically, $198.17 million of those liquidations were shorts forced to close as Bitcoin’s price climbed. The skew was even more pronounced in shorter timeframes: in the past four hours, $63.87 million of the $67.58 million liquidated were shorts, and over 12 hours, $83.57 million of $89.64 million were shorts.
The catalyst for the bounce was a deal-driven optimism ahead of an expected Friday signing of a US-Iran agreement, which spurred a relief rally across risk assets. However, the speed and force of the move were amplified by the cascade of short covering. As Bitcoin pierced the key $66,365 level, the flood of forced buy orders pushed price higher, squeezing short sellers who had bet on further declines.
Open interest on Bitcoin futures has recovered to $48.16 billion, indicating that new positions are being opened alongside the price rise, not just short covering. The 4-hour chart shows Bitcoin reclaiming the 50-day moving average near $63,490 and the 100-day near $65,303, both now acting as support. The next major resistance is the 200-day moving average at $71,132.
Caution remains warranted, however. The 4-hour RSI has surged to 73.84, firmly in overbought territory, suggesting the rally may be overextended. A healthy retest of the $65,300 level as support would be needed to confirm a shift to a more durable uptrend, especially as the short-squeeze fuel is finite. Without sustained spot buying, the move risks a sharp reversal once the forced purchases subside.
The episode underscores the outsized role derivatives play in Bitcoin’s intraday price action, with liquidations serving as both a risk and opportunity for traders. Market participants now eye whether the deal catalyst can attract genuine demand or if this remains a technically-driven blip.
