Bitcoin price is soaring, and an unusual “gamma squeeze” indicates that the price movement is set to become intense.

Bitcoin's recent surge past $97,000 over the last day continues a trend that indicates a fundamental shift in the dynamics of how capital interacts with this asset class.

As per data from CryptoSlate, BTC peaked at $97,860, marking its highest price since last November. This price action reflects the strong start of the leading digital asset in the year, which has positively influenced the wider cryptocurrency market.

However, this price increase is not happening in isolation. It is bolstered by significant on-chain metrics that illustrate a resurgence in institutional interest, juxtaposed with a supply side that has suddenly halted selling.

In this context, CryptoSlate, referencing on-chain data, elucidates why Bitcoin is currently on an upward trajectory.

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Bitcoin's spot bid and whale dominance

The primary catalyst behind the price increase was a notable resurgence in US spot Bitcoin ETF inflows.

Data from Coinperps revealed that the 12 Bitcoin ETF products experienced inflows exceeding $1.5 billion within the last two days alone.

These figures are significant not just for their size but also for their mechanical implications.

Post-halving, Bitcoin’s new issuance stands at approximately 450 BTC per day. At the current price levels, this equates to a relatively modest dollar amount compared to the demand suggested by high-inflow ETF days.

ETF inflows are not the sole source of spot purchasing, nor do they correlate directly with immediate “market buys” in every instance. Nevertheless, they serve as a highly visible, regulated channel that can swiftly introduce incremental demand into the market.

This mechanism is especially potent when institutional investors rebalance or when broader “risk-on” sentiment returns to financial markets.

This dynamic clarifies why ETF flow data has evolved into a daily macro-like indicator for the cryptocurrency sector. It elucidates why Bitcoin can appreciate even when crypto-specific narratives are subdued.

Data from CryptoQuant supports this narrative of strength driven by spot buying. According to the company’s indicators, the movement was not initially fueled by leverage but by authentic demand for the asset itself.

CryptoQuant’s 90-day Spot Taker CVD began to show positive signs around $86,000, indicating an increase in Taker Buy dominance. This metric suggests that buy volume consistently surpassed sell volume well before the price achieved its current highs.

Bitcoin Spot Taker Volume (Source: CryptoQuant)

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Moreover, the nature of this purchasing was notable. The Spot Average Order Size indicated “Whale Orders” during the same timeframe. This suggests that the buy volume was primarily driven by larger entities rather than widespread retail speculation.

These investors took the initiative in this rally through spot acquisitions rather than depending on fragile leverage.

Profit-taking slows

The second phase of the movement is characterized by the lack of a counteracting force: persistent profit-taking.

Recent market notes from Glassnode reveal that realized profit has sharply declined from the elevated levels seen earlier in the fourth quarter.

According to the firm, the 7-day moving average of realized profit for long-term holders of BTC has dropped to approximately $183.8 million per day. This marks a significant decrease from levels exceeding $1 billion per day in late 2025.

This is significant because Bitcoin rallies do not solely rely on buyers; they also require fewer willing sellers.

When the intensity of profit-taking diminishes, even modest demand can drive prices higher since the market is not continually being “refilled” with distribution from holders securing gains.

Importantly, this hesitance to sell is further demonstrated by the Value Days Destroyed (VDD) indicator. This metric assesses the number of days bitcoins have remained inactive before being transferred, weighted by the amount of BTC moved.

A low value indicates that newer coins are being transferred, while a high value suggests that older, long-held coins are being liquidated.

Currently, the VDD is approximately 0.53 as of January 2026, a historically low figure. This indicates that the BTC being moved on the network is relatively young, suggesting that older coins remain untouched.

Bitcoin Value Days Destroyed (Source: CryptoQuant)

Historical cycles indicate that a rising Bitcoin price coupled with a low VDD reading signals a strong expansion. In this context, incoming demand does not need to contend with a significant wall of structural selling, allowing bids to elevate prices more effectively.

Thus, the current breakout beyond resistance is underpinned by the inactivity of long-term holders. This reinforces the notion that robust market strength is propelling the asset rather than a fragile rebound driven by short-term speculation.

Derivatives as an accelerant

The third factor is a classic accelerant: derivatives positioning.

As Bitcoin rose, coverage of the crypto market observed a wave of short liquidations. These are forced buybacks by traders who bet against the movement. Such events can result in sudden “air pockets” as stops are triggered and liquidations cascade.

Indeed, data from Glassnode revealed that the latest surge triggered the largest short liquidation event since October 10 among the top 500 cryptocurrencies.

Bitcoin Short Liquidation Volume (Source Glassnode)

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However, beyond the headline liquidation figures, the more structural change may have involved what transpired with options.

Glassnode also observed that the market experienced its largest-ever options open interest reset around the late-December expiry, with open interest decreasing from 579,258 BTC to 316,472 BTC. This signifies a decline of over 45%.

For market observers, options open interest is crucial because it can alter how market makers hedge their risk.

Glassnode also highlighted that dealer gamma was short in the ~$95,000–$104,000 range. This setup can amplify upward movement once prices start to rise, as hedging flows align with the movement rather than dampening it.

In simple terms, the rally not only drew in new buyers but also compelled buying (through liquidations and hedging behavior) once key levels were tested.

Meanwhile, CryptoQuant data confirms that futures participation came later in the sequence and was predominantly driven by retail activity.

According to the firm, BTC's Futures Taker Buy Volume turned positive around $91,400, which was slightly later than the spot bid.

Nonetheless, it aligned with the leading cryptocurrency’s upward trend and validated the market’s strength.

Macro and policy tailwinds

Bitcoin does not operate in isolation, and macroeconomic factors provided a more favorable backdrop this week.

The latest US CPI report indicated headline inflation at 2.7% year-over-year in December, with core CPI at 2.6% year-over-year. On a monthly basis, headline CPI was at 0.3% (seasonally adjusted).

Markets often interpret this as a straightforward question: Does inflation pressure maintain real yields at elevated levels and financial conditions tight, or does it permit risk appetite to broaden?

Real yields remain historically significant (around 1.83% on the US 10-year TIPS yield in recent assessments), but a softer inflation trend can lower the chances of additional tightening shocks and favor high-beta assets.

Bitcoin’s responsiveness to macroeconomic conditions varies by regime. However, during periods when crypto trades as a “risk-on” proxy, reduced inflation anxiety can be sufficient to support a rebound, particularly when spot flows and positioning align.

Additionally, a quieter factor is the evolving US policy discourse surrounding crypto market structure.

US lawmakers consider the CLARITY Act as an essential piece of legislation that establishes clearer boundaries among agencies and mitigates “regulation-by-enforcement” dynamics.

While the legislation has elicited varied reactions from market participants, industry stakeholders concur that the bill could benefit BTC by establishing a more favorable regulatory environment that reduces the risk premium.

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Can Bitcoin continue the run?

The pressing question is whether Bitcoin can transform this rebound into lasting upward momentum.

Glassnode emphasizes the Short-Term Holder (STH) cost basis around ~$99,100 as a crucial level. The reasoning is straightforward: when recent buyers are at breakeven or in profit, they are less inclined to sell defensively during minor pullbacks, thereby instilling confidence in momentum traders.

Bitcoin Short-Term Holders Cost Basis Model (Source: Glassnode)

Simultaneously, Bitcoin is approaching an overhead supply zone where many buyers’ cost bases cluster. Glassnode identifies a broad overhead range of approximately $92,100 to $117,400.

This suggests that as prices rise, it may repeatedly encounter groups eager to sell into strength near breakeven.

This creates two plausible scenarios. In a continuation scenario, if ETF inflows remain consistently positive and the price reclaims ~$99,000, the market could grind higher through supply as sellers are absorbed (especially if derivatives hedging continues to be supportive).

In a failure scenario, if prices consistently reject below the STH cost basis and macro conditions tighten due to rising real yields, the movement risks resembling another range rally that exhausts as overhead supply reemerges.

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