BTC has broken 86,000.

More precisely, it has surged to around 87,000, setting a new high since late January this year. From last week’s low of 75,000, it’s risen 16% in five days. Many people have started chanting, “The bull market is back.”

But in today’s post, I want to pour some cold water—not to say the rally is over, but to tell you that you need to figure out how this upswing actually came about in order to judge how far it can go.

First, get clear on this: how did this rise happen?

Let’s break down the driving factors behind this surge—roughly three layers:

First layer: short liquidations

This is the most direct push. Over the past few months, a large amount of short positions have piled up in the 82,000–86,000 range. According to Coinglass data, once it breaks 88,000, it will trigger $686 million in short liquidations. When the price moves past a key level, shorts are forced to cover, which creates a self-reinforcing uptrend.

In the past 24 hours, the entire market saw $938 million liquidated in total, including $795 million in short positions—this is the force of a short squeeze.

Layer two: sentiment repair

Last week (the clear bill) didn’t pass, and the Fed raised rates. The market panicked to the extreme—BTC was dumped to 75,000, and the Fear & Greed Index fell to 32. But then the SEC rolled out the tokenized stock exemption, ETF funds flowed back in again, and sentiment reversed quickly.

From fear 32 to greed 77, it only took five days. This level of emotional swing itself will amplify price volatility.

Layer three: narrative shift

This is what deserves the most attention. The market’s core narrative is shifting from “Will regulation kill crypto?” to “Will tokenization recreate a crypto market?”

When the narrative changes, the valuation model changes too. Previously, the market valued DeFi by asking how big it could get within the crypto circle—now the market is starting to think: what if DeFi’s technology can be used to trade $77 trillion of US stocks?

That’s why UNI is up 100% in a month, and why the DeFi sector is surging even harder than BTC. It’s not because the fundamentals changed overnight—it’s because the imagination space the market gives it has changed.

Second, here’s the problem: can these driving factors last?

The logic behind short liquidations: once the shorts get wiped out, it’s gone.

The logic behind sentiment repair—once it repairs to a certain point, it’s basically done.

The narrative shift can support valuation in the short term, but in the long term it has to be verified by performance.

So you need to think clearly: after the short squeeze ends, is there new buying to take over?

Let’s look at a few key indicators:

ETF funds haven’t fully caught up yet.

On September 21, the ETF saw net inflows of 4,668 BTC (about $380 million). It’s much better than last week’s outflows, but compared with the 1 billion+ single-day inflow level in August, it’s still far off. Institutional capital is still watching from the sidelines—no broad-based entry yet.

Open interest is increasing, but not at extreme levels.

BTC’s open interest rose 8.8% over 7 days to $55.7 billion, at the 92nd percentile of the past 90 days. This suggests leveraged funds are entering, but not to the point of extreme euphoria.

Fear & Greed Index at 77 has already entered the greed zone.

From extreme fear to greed, it only took one week. The faster sentiment repairs, the higher the risk of a short-term pullback. Historically, when an index charges above 80, the stage of the local peak is usually not far off.

Third, my take: cautious in the short term, optimistic in the long term.

Let’s get to the conclusion:

Short term (1–2 weeks): It’s up too fast and needs to digest.

The price rose 16% in five days, surging from 75,000 to 87,000. This speed is not sustainable. The range above 88,000–90,000 is the next resistance zone, and also the dense trading area since the decline last December, with many trapped holders. The probability of blasting straight through is low; a more likely path is consolidation and digestion between 82,000 and 88,000 for a period of time.

Don’t chase when it’s up—buy after a pullback. Below 80,000 is a relatively safer zone.

Medium term (1–3 months): Bullish, target 90,000+.

Why am I bullish for the medium term? Because this rally isn’t just sentiment repair—there have been real fundamental changes behind it:

SEC exemption for tokenized stocks opens up a new narrative space. The European Central Bank launches the Pontes platform. Central banks worldwide are pushing for tokenization-related ETF capital to flow back in. As technical demand recovers, BTC’s weekly chart has crossed above the 50-week moving average—this is the first time in 10 months.

With all these factors combined, it’s enough to support the market for a while. I think it’s quite possible that Q4 could touch 90,000, even 95,000.

Long-term (more than half a year): Very optimistic.

Once the tokenization of stocks opens up, blockchain use cases expand from “crypto assets” to “all financial assets.” The scale of this change is even bigger than what ETFs are able to drive through.

Short-term prices may pull back, but the long-term direction is becoming clearer and clearer.

Finally,

Whenever the market rallies, there are always two types of people:

One type of person is extremely excited, thinking a bull market is here—going all in with full position and using leverage, afraid of missing out.

Another type of person is especially cautious—they think it’s all a scam, that it could collapse at any moment, so they stay in cash waiting for a crash.

But the ones who truly make money are often those in between—people who see the long-term big trend while staying alert to short-term risks.

At this level, I’m not going to tell you to go all-in, and I’m not going to advise you to clear your position.

I’d suggest this: if you already have holdings, hold your core position and don’t get shaken out easily; if you want to add, don’t chase the price—wait for a pullback and buy in batches. Be cautious with leverage: the more violently it rallies, the harsher the retracement will be.

When the market starts moving,

It’s not about who makes money faster,

Whoever can survive to the end,

Take the profits with you.

Let’s chat in the 9 PM group chat: “How far can this rebound go?” Go deep—if you want to join, come on in.

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