After falling over the weekend as the United States launched attacks on Iran, bitcoin it shot higher on Monday, at one point near $70,000 before retreating to the current $69,000.
While any rally in bitcoin is welcomed by bulls, today’s move comes after a relentless months-long slide that has cut the price in half and weighed on sentiment. One analyst suggests Monday’s rapid gains bear the hallmarks of a positioning squeeze, with traders who had bet on further declines forced to unwind those trades as prices rose.
“This is clearly a wave of shorts due to the confluence of the Iranian attacks causing a rebalancing across the entire capital stack with bitcoin getting a tailwind from a reversal of bitcoin ETF spot outflows,” said Mark Connors, chief investment officer at Risk Dimensions. In other words, macroeconomic shocks triggered repositionings across markets, and bitcoin benefited as some investors returned to taking risks, and recent bitcoin ETF spot outflows slowed or reversed.
A short color can create quick and sharp rallies. When traders who borrowed to bet on falling prices rush to close their positions, they must buy back the asset, adding fuel to the move. That dynamic can drive prices higher than the fundamentals alone would justify, at least in the short term.
“This is not a sign of a march back to $100,000 and through the very important resistance at $75,000,” said a cautious Connors. In his view, the rally does not yet mark a decisive break from the broader downtrend. Key resistance levels remain above and without sustained spot demand, the rebound could stop as quickly as it started.
Market positioning data underlines its caution and shows how tense the derivatives market has become.
CoinGlass liquidation heatmap data shows a pool of $218 million positions that will be liquidated if the price falls to between $65,250 and $64,650, which was the base from which Monday’s rally began.
This, coupled with the open interest increasing by 6% in the last 24 hours while the price rose by 3.8%, suggests that the move is supported by leverage rather than spot purchases, leading several traders to take profits at the psychological resistance level of $70,000.
On the other hand, a break above $70,000 would trigger around $90 million in short liquidations, which is likely enough fuel to challenge the February high of $72,000.
