Bitcoin drops over the weekend after U.S. begins crackdown on Iran It rose on Monday, briefly approaching $70,000, before falling back to its current level of $69,000.
While any rebound in Bitcoin would be welcomed by bulls, today’s move comes after a months-long slide that led to the price halving and weighed on market sentiment. One analyst said Monday’s rapid gains were characterized by a squeeze on positions, with traders who had bet on further falls forced to close their positions as prices rose.
Mark Connors, chief investment officer at Risk Dimensions, said: “This is clearly a short wave, as the overlay of the Iran attack caused the entire capital to rebalance, and the reversal of Bitcoin ETF spot outflows brought a tailwind for Bitcoin.” In other words, the macro shock triggered a repositioning of the entire market, Bitcoin benefited as some investors moved back to risk investments, and recent spot Bitcoin ETF outflows slowed or reversed.
Short flushes can create sharp, fast rallies. When traders who borrowed money to bet on falling prices rush to close their positions, they must buy back the assets, exacerbating the move. This dynamic could push prices higher than the fundamentals alone justify, at least in the short term.
“This is not a signal of a return to $100,000 and a breakout of the very important 75,000 resistance level,” said cautious Connors, who believes the rally has yet to mark a decisive break from the broader downtrend. Key resistance levels remain above and without sustained spot demand, the rally could stall as quickly as it started.
Market positioning data underscores his caution and shows how serious the derivatives market has become.
Data from the CoinGlass liquidation heat map shows that $218 million worth of positions would be liquidated if the price fell between $65,250 and $64,650, the base from which Monday’s rally began.
This coupled with a 6% increase in open interest over the past 24 hours while the price rose 3.8% suggests that this move was supported by leverage rather than spot buying, leading many traders to take profits at the psychological resistance level of $70,000.
On the other hand, a break above $70,000 would trigger about $90 million worth of short liquidation — which could be enough to challenge February’s $72,000 high.
