Bitcoin took three bearish hits last week. The Federal Reserve, after years, raised rates again; the Bank of Japan followed suit, pushing interest rates to levels not seen in many years. In the Senate, the crypto market structure bill, CLARITY, failed to pass even the procedural vote. Based on experience from the past few years, a week like this is when bulls should usually stay away—yet on Monday, a big bullish candle appeared.
On Monday, $BTC pushed through 85,000 and even touched above 87,000 intraday—first time returning to that level since the end of January. This morning it pulled back to around 85,000. What the market is arguing about now is what this move actually represents: is it fuel from shorts being squeezed out, or is actual spot money really back? The two answers lead to completely different paths from here, so I broke down the data that could be pulled.
The squeeze part is real. According to liquidation data compiled by Crypto Briefing, roughly $648 million worth of short positions were wiped out across the whole network in a single day, with the most concentrated clean-up happening during the single hour when the rally was strongest. Glassnode had already warned before the market even took off that a large pile of short positions sat not far above the current price. Once price enters that range, liquidation orders turn into market buy orders, and the market essentially pushes itself higher. This fuel can only burn once—once it’s burned, it’s gone.
But squeeze alone can’t explain the change in open interest on Binance perpetual futures. If it were only a squeeze—shorts getting liquidated and positions being closed passively—open interest should trend downward. From daytime into late night on Monday, BTCUSDT perpetual open interest rose from about 108,000 BTC to above 111,000 BTC. While price was being driven up, open interest was also increasing, which suggests that while some shorts were being liquidated, others were simultaneously opening new long positions.
Funding rates didn’t run out of control. During the entire push, the rate hovered around roughly 0.01% (one basis point). Even the batch settled at 8 a.m. this morning was below that level, and the long/short account ratio also still showed slightly more shorts. Quite a few long positions were newly opened, but not many were willing to chase at high prices. This mix is more like someone built positions on the breakout, while retail leveraged longs haven’t poured in at scale yet.
On the spot side, U.S. spot Bitcoin ETFs saw a V-shaped week. In the two days around the policy decision, total outflows were about $746 million. Starting Thursday, flows flipped to inflows, and on Friday a single day saw $433 million in inflows—its biggest day since early September. On Monday, Strategy disclosed that last week it bought another 950 BTC with cash, totaling $75.7 million. That amount isn’t huge relative to today’s trading volume, but its significance is that Saylor is still willing to pull out cash at these prices.
Why didn’t the three bearish hits knock the market down? The reasons aren’t mysterious. The rate hike was already fully priced into the market. When the “boot” finally dropped, there was one less uncertainty. After the Bank of Japan’s hike, the yen didn’t strengthen; Japan’s rates remain far below the U.S., so the feared unwinding of carry trades didn’t happen. CLARITY failing was a bad sign, but in the same week the SEC granted new exemptions for tokenized securities trading venues, and regulation wasn’t tightening in a one-directional way.
On the debate, both sides have plenty of heavyweight supporters. Galaxy Research’s head Alex Thorn is the most optimistic. Last week Bitcoin’s weekly close was above the 50-week moving average—first time since 45 weeks ago. He tracked the 13 times in the past that had similar recoveries: 11 of them did not go on to set new lows afterward, leading him to believe the bear-market bottom has likely already arrived. But he also said this bottom is still provisional. The other camp’s worries have justification too. During the rebound in August, some analysts had already warned that after the squeeze burns out, if spot doesn’t step in, the reversal back often comes quickly and violently—and the market did, in fact, churn up and down for several more weeks afterward.
My take is that this move is more solid than August’s, but it still isn’t solid enough to treat 85,000 as a newly confirmed step. Short squeeze fuel, ETF inflows, and new long openings in futures all showed up together, and funding rates stayed moderate. In the past six months, many rebounds only had the first ingredient—once the squeeze was done, the market turned around. I agree with Thorn’s direction: reclaiming the 50-week moving average does show up often statistically near the end of bear markets. But even he says it’s provisional, so I won’t treat a statistical pattern as a completed conclusion.
What would make me change my mind is the divergence between ETF flows and futures open interest. If this week’s ETFs start seeing net outflows again for several consecutive days, while futures open interest continues to stack higher, it would suggest spot buyers are stepping away and only leverage remains. That kind of structure is easiest to get knocked back by a single long lower shadow, and in this case, the longs that got squeezed would be the same ones who chase in on Monday.
There are also many external variables. This Thursday, Trump is scheduled to meet with Xi Jinping. In market sentiment, some risk is implicitly being bet on a smooth meeting; if talks break down, risk assets would face pressure together, and Bitcoin would likely not be able to avoid it. The Federal Reserve also hinted last week that there could be another hike later in the year. The PCE inflation data at the end of the month will directly affect that expectation.
In the next few days, you can compare Farside’s daily updated ETF flow data side by side with Binance perpetual open interest. If both move upward together, then 85,000 can be considered to hold; if only open interest is rising, then that move is still being propped up by leverage. #BTC
On Monday, $BTC pushed through 85,000 and even touched above 87,000 intraday—first time returning to that level since the end of January. This morning it pulled back to around 85,000. What the market is arguing about now is what this move actually represents: is it fuel from shorts being squeezed out, or is actual spot money really back? The two answers lead to completely different paths from here, so I broke down the data that could be pulled.
The squeeze part is real. According to liquidation data compiled by Crypto Briefing, roughly $648 million worth of short positions were wiped out across the whole network in a single day, with the most concentrated clean-up happening during the single hour when the rally was strongest. Glassnode had already warned before the market even took off that a large pile of short positions sat not far above the current price. Once price enters that range, liquidation orders turn into market buy orders, and the market essentially pushes itself higher. This fuel can only burn once—once it’s burned, it’s gone.
But squeeze alone can’t explain the change in open interest on Binance perpetual futures. If it were only a squeeze—shorts getting liquidated and positions being closed passively—open interest should trend downward. From daytime into late night on Monday, BTCUSDT perpetual open interest rose from about 108,000 BTC to above 111,000 BTC. While price was being driven up, open interest was also increasing, which suggests that while some shorts were being liquidated, others were simultaneously opening new long positions.
Funding rates didn’t run out of control. During the entire push, the rate hovered around roughly 0.01% (one basis point). Even the batch settled at 8 a.m. this morning was below that level, and the long/short account ratio also still showed slightly more shorts. Quite a few long positions were newly opened, but not many were willing to chase at high prices. This mix is more like someone built positions on the breakout, while retail leveraged longs haven’t poured in at scale yet.
On the spot side, U.S. spot Bitcoin ETFs saw a V-shaped week. In the two days around the policy decision, total outflows were about $746 million. Starting Thursday, flows flipped to inflows, and on Friday a single day saw $433 million in inflows—its biggest day since early September. On Monday, Strategy disclosed that last week it bought another 950 BTC with cash, totaling $75.7 million. That amount isn’t huge relative to today’s trading volume, but its significance is that Saylor is still willing to pull out cash at these prices.
Why didn’t the three bearish hits knock the market down? The reasons aren’t mysterious. The rate hike was already fully priced into the market. When the “boot” finally dropped, there was one less uncertainty. After the Bank of Japan’s hike, the yen didn’t strengthen; Japan’s rates remain far below the U.S., so the feared unwinding of carry trades didn’t happen. CLARITY failing was a bad sign, but in the same week the SEC granted new exemptions for tokenized securities trading venues, and regulation wasn’t tightening in a one-directional way.
On the debate, both sides have plenty of heavyweight supporters. Galaxy Research’s head Alex Thorn is the most optimistic. Last week Bitcoin’s weekly close was above the 50-week moving average—first time since 45 weeks ago. He tracked the 13 times in the past that had similar recoveries: 11 of them did not go on to set new lows afterward, leading him to believe the bear-market bottom has likely already arrived. But he also said this bottom is still provisional. The other camp’s worries have justification too. During the rebound in August, some analysts had already warned that after the squeeze burns out, if spot doesn’t step in, the reversal back often comes quickly and violently—and the market did, in fact, churn up and down for several more weeks afterward.
My take is that this move is more solid than August’s, but it still isn’t solid enough to treat 85,000 as a newly confirmed step. Short squeeze fuel, ETF inflows, and new long openings in futures all showed up together, and funding rates stayed moderate. In the past six months, many rebounds only had the first ingredient—once the squeeze was done, the market turned around. I agree with Thorn’s direction: reclaiming the 50-week moving average does show up often statistically near the end of bear markets. But even he says it’s provisional, so I won’t treat a statistical pattern as a completed conclusion.
What would make me change my mind is the divergence between ETF flows and futures open interest. If this week’s ETFs start seeing net outflows again for several consecutive days, while futures open interest continues to stack higher, it would suggest spot buyers are stepping away and only leverage remains. That kind of structure is easiest to get knocked back by a single long lower shadow, and in this case, the longs that got squeezed would be the same ones who chase in on Monday.
There are also many external variables. This Thursday, Trump is scheduled to meet with Xi Jinping. In market sentiment, some risk is implicitly being bet on a smooth meeting; if talks break down, risk assets would face pressure together, and Bitcoin would likely not be able to avoid it. The Federal Reserve also hinted last week that there could be another hike later in the year. The PCE inflation data at the end of the month will directly affect that expectation.
In the next few days, you can compare Farside’s daily updated ETF flow data side by side with Binance perpetual open interest. If both move upward together, then 85,000 can be considered to hold; if only open interest is rising, then that move is still being propped up by leverage. #BTC