Bitcoin's recent rally feels less like a genuine bull charge and more like a leverage-fueled circus tent collapsing on the bears. The breakout triggered a massive short squeeze, the largest across the top 500 cryptos since October 10, 2025, according to Glassnode. This forced bearish traders to unwind positions at scale, with liquidation spikes perfectly timed with Bitcoin's push to local highs. Millions in short exposure were wiped out, and the forced buybacks chased price higher, reinforcing upside pressure. This behavior has been building since late 2025, but intensity accelerated as Bitcoin held elevated levels instead of retracing. If current liquidations continue, momentum alone could push BTC toward the $100,000-$105,000 zone. However, if funding cools and Open Interest resets, price may consolidate. Past squeezes show sustainability often depends on spot demand replacing leverage.
Meanwhile, OG Bitcoin holders are no longer dumping their bags at the pace seen earlier in the cycle. STXO data for coins dormant over five years reveals a clear slowdown in long-term holder spending. CryptoQuant confirmed OGs were highly active into 2024, using institutional demand and government buying as ideal exit liquidity, but that behavior has shifted. Earlier in the cycle, OG spending peaked near 3,800 BTC, then cooled to 3,200 BTC, followed by 2,200 BTC. Lighter OG selling reduces overhead supply and supports price stability in the short term, but in the long term, this signals conviction. Historically, OG restraint aligns with accumulation phases rather than late-cycle distribution.
A clear divergence has emerged: whales are unwinding long exposure and rotating into shorts, a deliberate shift. Usually, when price sits near elevated levels, momentum fades and leverage quietly rebuilds, skewing risk to the downside. Whales reacted early, seeing crowded positioning and late-cycle behavior, while OGs are no longer distributing aggressively. This isolates organic sell pressure, leaving leverage as the main driver. Retail traders, however, are moving the opposite way—chasing upside and adding longs as volatility expands. Such a setup implies a potential shakeout or cooling phase. If leverage unwinds, price will likely retrace before any sustainable continuation.
In summary, Bitcoin's structure is clear: leverage, not spot demand, is driving momentum. Short liquidations lifted the price, while OG selling slowed and whales turned defensive. This tightens supply but raises fragility, leaving upside vulnerable. Sustainable gains require spot demand to replace leverage; without it, volatility risk remains, and any further extension could face a corrective reset.
Bitcoin's price staged a steady recovery, extending gains to near a potential breakout zone near $97,500—its strongest level since early November. This rebound unfolded despite a notable contraction in retail participation. On-chain data shows a net drop of -47,244 holders over the past three days, indicating retail exiting due to FUD and impatience, per Santiment. Exchange balances have dropped to a seven-month low of roughly 1.18 million BTC, signaling lower immediate selling pressure. This is the third instance in three months where falling exchange balances coincided with price stabilization, strengthening confidence that Bitcoin may be forming another local bottom.
Macro indicators add nuance: the Market Value to Realized Value Long/Short Difference shows short-term holders regaining profitability dominance over long-term holders. Recent accumulation and rising prices have pushed short-term holder profits to their highest levels since January 2023. Elevated short-term profitability can be a double-edged signal—reflecting improving demand and price strength but also making these holders more prone to selling. No clear evidence of aggressive distribution exists yet, but sustained gains could tempt profit-taking, potentially slowing Bitcoin's recovery.
Bitcoin is trading near $95,372, within an ascending broadening wedge that often carries bullish implications if the price breaks higher and holds. A confirmed breakout requires reclaiming $98,000 and successfully retesting it as support. If current conditions persist, the apparent bottom formation could support another leg higher. Holding above the $95,000 psychological level remains critical; a successful defense would likely encourage buyers to challenge $98,000 again, flipping it into support and opening the path toward the $100,000 milestone. A bearish alternative remains plausible: if bullish momentum fades and short-term holders book profits, Bitcoin could lose $95,000 support, sending BTC toward $93,471 or lower. A breakdown below that zone would invalidate the bullish thesis and delay breakout attempts.
