Analysts say sharp price jumps accompanied by heavy short liquidations are often characteristic of market bottoms, although lingering macroeconomic risks mean the recovery is not without uncertainty.
Bitcoin has built considerable momentum over the past several sessions, according to Mati Greenspan, former senior eToro market analyst and founder of Quantum Economics.
Greenspan said the current price action resembles the early stages of previous market bottoms. These moves often start with a short squeeze and a large upward candle, followed by breaks above important technical levels. As momentum builds, traders who had been waiting for Bitcoin to fall toward $40,000 can quickly reverse course and buy for fear of missing the rally.
Greenspan acknowledged that another decline remains possible but said he would not expect it as the most likely outcome. In his view, strong rallies can quickly trigger a wave of FOMO among sidelined investors.
Jason Fernandes, market analyst and co-founder of AdLunam, urged greater caution. He said it is too early to conclude that Bitcoin’s bear market has ended, particularly without consistent spot ETF inflows and convincing evidence of monetary-policy easing. He warned that BTC could lose momentum as it approaches major resistance.
Bitcoin reached approximately $79,200 on Friday before retreating toward $77,500.
Greenspan nevertheless maintained his bullish outlook, saying the current setup looks similar to previous turning points and that the chances of a major near-term correction appear limited.
He pointed to several supportive developments, including White House discussions around Bitcoin Treasury strategies, congressional work on crypto market-structure legislation, and efforts by the SEC and CFTC to provide greater regulatory clarity for digital assets.
Fernandes also identified several macro catalysts behind the rally. He highlighted the Treasury’s decision to increase bond buybacks to $4 billion, which helped push long-term yields lower and improved appetite for risk assets.
He said Bitcoin’s prolonged consolidation below the $64,000-$66,000 range had allowed traders to build sizable short positions.
The subsequent move above resistance triggered forced liquidations of those bearish positions, creating a cascading effect that accelerated Bitcoin’s gains. A break above $66,000 and the 200-day moving average also encouraged algorithmic trend-following strategies to enter the market.
Adam Morgan McCarthy, lead researcher at London-based digital-asset liquidity and market-data firm LO:TECH, said the rally toward $70,000 was largely driven by short sellers being forced to close their positions.
He noted that more than half of Bitcoin’s 7.1% gain on Wednesday occurred during a single hour, even though that period represented only about one-third of the day’s total trading volume. McCarthy said such concentrated buying is a classic indication of a short squeeze.
McCarthy also compared Bitcoin’s performance with gold. He argued that gold offered a cleaner reflection of this week’s macroeconomic signal, rising after Treasury announced larger bond purchases without the forced buying that amplified Bitcoin’s move.
From that perspective, McCarthy said gold currently provides stronger evidence of investors seeking protection from inflation and currency risks than Bitcoin does.
Tobias Bauer, co-founder of TBV, pointed to another sign of overheated positioning. Binance recorded about $1.26 billion in Bitcoin futures volume during a single 60-second period, roughly 361 times the usual one-minute volume.
With funding rates approaching exchange-imposed highs, Bauer warned that traders are becoming heavily concentrated on the bullish side and that holding leveraged long positions at current levels is becoming increasingly expensive.
