Bitcoin bulls may face a significant short squeeze as BTC surpasses $70,000.

Bitcoin surpassed $70,000 today for the first time since early February, continuing a recovery that appears to be evolving from a temporary relief rally into a market attempting to shift momentum after several months of significant selling.

Data from CryptoSlate indicated that Bitcoin increased by over 7% today, propelling the leading digital asset to its highest point in nearly a month. This movement occurred against a backdrop of renewed geopolitical tensions regarding Iran, which has contributed to heightened volatility across global markets.

The significance of the recent price increase lies not only in the headline figure but also in the state of Bitcoin prior to the rebound.

Vetle Lunde, head of research at K33 Research, noted that Bitcoin had entered the previous weekend in a state of heavy overselling, substantial shorting, and considerable underownership.

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This is significant because Bitcoin was already trading under markedly different circumstances compared to gold, stocks, and other major assets before the recent escalation in the Middle East introduced a new layer of uncertainty.

K33 reported that Bitcoin had experienced a 50% decline after five consecutive months of downward price movement. Its weekly relative strength index had fallen to its third-lowest level ever recorded.

Bitcoin Price Monthly Losses Streak (Source: K33 Research)

In essence, Bitcoin entered the week in an unusually stretched condition, one that appeared statistically abnormal even before geopolitical tensions became the prevailing market narrative.

This context is crucial to the reversal argument currently developing.

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A market already primed to snap back

K33 argues that Bitcoin was susceptible to a sharp upward movement because positioning had become excessively one-sided.

Institutional investors had significantly reduced their exposure during the preceding months of selling pressure.

For context, spot Bitcoin ETFs had experienced nearly 100,000 BTC in outflows, while notional CME open interest had decreased by 30% from levels seen in October.

This indicated that one of the investor groups most likely to utilize Bitcoin as a hedge against uncertainty had already stepped back, allowing some of the asset’s typical correlations to weaken.

Simultaneously, crypto-native positioning had turned unusually defensive. K33 noted that funding rates in perpetual futures had been exceptionally low, and throughout February, traders had paid premiums to maintain short positions.

Bitcoin Funding Rates (Source: K33 Research)

This behavior is atypical for Bitcoin, an asset that generally maintains a structural long bias over time.

The firm stated that similar funding-rate conditions have frequently appeared during bottoming phases, reflecting crowding, imbalances, and indications of seller exhaustion.

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Importantly, the options markets were conveying a similar sentiment. In February, skews surged to levels typically observed only during the most severe panic periods of 2022, including the collapses associated with Luna, Three Arrows Capital, and FTX.

There were also indications from the blockchain. K33 highlighted that long-term holder distribution diminished as Bitcoin lost support at $75,000 and approached its 200-week moving average.

Collectively, this setup indicated an asset that had already absorbed a significant amount of negative news, washed out leverage and sentiment, and was increasingly positioned for a sharp reversal if selling pressure subsided.

Why resilience matters in this macro backdrop

The reversal thesis has gained momentum partly because Bitcoin has demonstrated greater resilience than some anticipated, given the broader stress surrounding it.

Data from CryptoQuant indicated that US tensions with Iran have continued to escalate, complicating oil and gas trade flows, while gas prices in Europe surged by over 70%, and South Korean stocks fell another 12% today.

Yet in this context, Bitcoin broke above $71,000 and reclaimed the $70,000 mark.

This resilience is not perceived as a mere random bounce. CryptoQuant reported that it was bolstered by five days of inflows into spot Bitcoin ETFs over the last six trading days. During this timeframe, cumulative inflows into the spot Bitcoin ETFs exceeded $1.6 billion.

Derivatives have also begun to show signs of life. CryptoQuant noted that Binance’s taker buy-sell ratio reached 1.18, the highest level recorded this year.

Binance Taker-Buyer Ratio (Source: CryptoQuant)

This metric assesses the balance between aggressive buying and selling activity in the derivatives order book, and the latest reading suggests that buyers are starting to regain control after an extended period dominated by selling pressure.

The pace of buying was remarkable. CryptoQuant reported that taker buy volume exceeded $1 billion per hour multiple times in a single day, contributing to Bitcoin’s rise above $71,000.

Furthermore, additional data from K33 indicated that notional open interest on Binance’s BTCUSDT perpetual contract increased by 7,547 BTC over the previous four hours, marking the first four-hour growth of that scale since 2023.

Binance's BTCUSDT Perp (Source: K33 Research)

This suggests that derivatives traders, who had leaned heavily bearish for weeks, were suddenly compelled to react to the emerging strength.

Thus, if ETF inflows persist and derivatives buyers maintain their advantage, the firm indicated that a short-term upward reaction would not be unexpected.

This is where the current narrative becomes more complex. The rebound is not solely about the return of spot demand; it also involves how a deeply oversold market can react when short positioning becomes crowded and aggressive buyers begin to push back.

The reversal signal is coming from US demand

Another reason analysts see potential for a broader momentum shift is that US investors seem to be reengaging with the market.

Notably, CryptoSlate previously reported that US investors are leading the current phase of Bitcoin purchasing.

One of the most evident indicators came from the Coinbase Premium Index, which turned positive in February 2026. Since then, Bitcoin has risen 15% and reclaimed $71,000, a level it had not reached in 27 days, according to CryptoQuant data.

Bitcoin's Coinbase Premium Index (Source: CryptoQuant)

This signal is significant because the Coinbase Premium Index is often utilized as a measure of US-led spot demand.

When it turns positive and remains there, it indicates that buyers on Coinbase are willing to pay more than traders on offshore platforms, often a sign of strengthening US appetite.

In this instance, the index turned positive and has maintained that level for approximately one week on the hourly timeframe, prior to the latest upward movement.

If the premium stays positive, it would reinforce the notion that the rally is not merely a derivatives-driven squeeze but a broader recovery in demand.

The $70,000 zone is still contested

Despite these developments, this does not imply that the market has decisively broken through resistance.

Crypto analytics firm Glassnode reported that perpetual open interest recorded its largest daily percentage increase since July 2025 as leverage expanded while Bitcoin tested around $69,400.

This level has consistently acted as a rejection zone for BTC during periods of intensified profit-taking by traders.

Moreover, Glassnode noted that each time the 12-hour simple moving average of net realized profit and loss exceeded $5 million per hour, the price stalled and reversed near the $69,400 range high.

Bitcoin Realized Profit/Loss (Source: Glassnode)

In this context, the market still faces a demand challenge. Buyers have been strong enough to push Bitcoin back toward $70,000, but not yet sufficiently robust to absorb profit-taking at that level without hesitation.

The firm’s conclusion was clear. Until that profit-taking can be absorbed without triggering rejection, $70,000 remains a ceiling rather than a floor.

This perspective broadly aligns with how analysts at Bitunix crypto exchange characterized the recent movement.

These analysts informed CryptoSlate that Bitcoin’s rapid ascent above $70,000 had created what they termed a classic upside liquidity sweep.

Consequently, they identified the $69,500 to $70,500 range as the most concentrated area of short pressure and liquidity accumulation.

According to Bitunix, long leverage below $68,000 has largely been cleared, while secondary liquidity remains near $64,000.

In their analysis, the market has already completed the initial phase of long liquidation. The next question is whether overhead short positions will be squeezed sufficiently to convert resistance into a breakout.

If repeated attempts above $69,000 fail to yield firm acceptance, Bitunix suggested that this zone could solidify into a short-term resistance core and pull Bitcoin back into a range.

Conversely, if a high-volume breakout absorbs liquidity above $69,800, forced short covering could ensue, leading to increased volatility.

Nevertheless, this does not guarantee a straightforward ascent.

However, it would indicate that Bitcoin is increasingly resembling an asset with the capacity to sustain upward momentum for the first time in weeks.

The post Bitcoin bears could walk into a brutal short squeeze next as BTC retakes $70k appeared first on CryptoSlate.