It has been suggested that the surge in Bitcoin this week was driven more by intense short liquidations in Binance futures trading than by strong buying in the spot market.
According to CryptoQuant analyst BorisD, Binance’s “Short Squeeze” indicator has risen to 6.94, reaching its highest value since November 2024. This data suggests that the upward movement in Bitcoin is largely driven by the forced closing of short positions.
The liquidation or closure of short positions by investors can create forced buying pressure in the market, causing the price to rise rapidly in a short period. However, the sustainability of such movements depends on whether spot investor demand kicks in after the short squeeze effect subsides.
BorisD stated that Bitcoin could face a pullback if the current rally is not supported by spot buying. According to the analyst, the lack of sustained buyers in the market when the momentum from the closing of short positions weakens could lead to a reversal of some of the recent gains.
*This is not investment advice.
