Bitcoin reaches $118.5k: Potential for all-time high increases as rate-cut expectations impact short positions.

On Thursday, Bitcoin’s price hovered around $118,500 as a U.S. government shutdown increased the likelihood of rate cuts, the dollar weakened, and a noticeable short squeeze intensified across derivatives platforms.

Gold reached new record highs near $3,895 per ounce as expectations for rate cuts solidified and the dollar index remained around 97.6. Historically, these conditions correlate with improved performance in Bitcoin when real yields decline. Treasury market data indicated that 10-year TIPS yields were approximately 1.77 to 1.78 percent, reinforcing the macroeconomic factors that aligned with this movement.

The day’s surge followed a repositioning that eliminated leverage into late September, making the market sensitive to macroeconomic news and sudden shifts. Last week experienced $1.7 billion in crypto liquidations, a cleanout that typically diminishes one-sided convexity until a new catalyst emerges.

As per CoinGlass, liquidation heatmaps in the $118,000 to $120,000 range revealed significant short positions prior to the breakout, and once these were cleared, such clusters often function as stepping stones for further movement if spot demand continues.

Bitcoin is currently just 4.8% shy of its all-time high. If the squeeze persists, price discovery may occur later in ‘Uptober.’

Bitcoin price chart (Source: TradingView)

Funding on major perpetual pairs showed a slightly positive trend leading into the move, with Binance perpetuals recording around +0.0084 percent in late September, creating a supportive backdrop for the trend without signaling near-term exhaustion.

Spot market mechanisms remain crucial.

Farside Investors reported a resurgence in U.S. spot Bitcoin ETFs, with a single-day net inflow of $645 million yesterday, part of a multi-day total exceeding $1.6 billion.

When daily net inflows consistently surpass approximately $500 million for two sessions, prices have historically increased by an additional 3 to 7 percent over the following 72 hours based on recent 2025 instances. Conversely, two or more sessions of outflows exceeding $300 million have been linked to a softer market and a shift toward negative funding.

The flows serve as the mechanical link between macro narratives and executed orders, and on days when the dollar declines and real yields decrease, ETF creations often carry that macro influence into the market close.

On-chain trend analysis remained focused on a single figure that traders can monitor without ambiguity. According to Glassnode’s latest Week On-Chain report, the short-term holder realized price was around $111,000, acting as a moving threshold for momentum.

A decisive daily close above this level has historically maintained the trend structure, while a drop below opens a gap toward previously accepted values between $106,000 and $108,000, where liquidations and bids have frequently converged this quarter.

This anchor aligns with the visible liquidation map above today’s price, where remaining clusters around $120,500 to $121,000 serve as clear targets if flows continue.

Macro context influences timing.

The U.S. government shutdown that commenced on October 1 complicated the data landscape leading into the Federal Reserve meeting on October 29, prompting traders to increase the likelihood of a 25 basis point cut as a hedge against ongoing uncertainty.

In this context, the dollar’s decline toward the high-97s and a gradual decrease in real yields coincided with increased demand for gold and Bitcoin, a relationship that tends to re-emerge when inflation-adjusted rates take precedence over growth surprises.

The signal is more evident in the market activity than in commentary, as Bitcoin’s primary spot conduit is now the ETF complex, which channels macro shifts into daily creations and redemptions.

Options data provided another perspective on the near-term trajectory. According to Deribit open-interest data, around $8 billion in Bitcoin options are set to expire on October 31, with concentration building around key strikes at $120,000 and $125,000.

Dealer hedging can stabilize prices in these ranges when flows net to neutral, which helps clarify why post-breakout markets often compress toward strikes before a new impulse from ETF prints or macro events disrupts this pattern. Skew and DVOL as the month concludes remain quick indicators of whether today’s movement is transitioning into premium or remaining spot-led.

Gold achieved record highs due to shutdown-related hedging, while Bitcoin exhibited a higher beta. This correlation often arises when the direction of the dollar and real rates are dominant factors.

BlackRock’s IBIT has emerged as the fastest-growing ETF in history, a detail that keeps the narrative of structural demand relevant whenever macro conditions set the stage. In such scenarios, the comparison is not merely about sound money principles but the tangible impact of lower discount rates on a high-gamma asset with active creation mechanisms.

Near-term trajectory can be framed in scenarios based on observable inputs rather than descriptive language.

An upward extension toward $121,000 to $125,000 becomes increasingly likely if total U.S. spot ETF inflows exceed $500 million for two additional consecutive sessions, the dollar index remains below 98, and 10-year TIPS yield trends toward 1.7 percent, while funding remains cool-positive and the liquidation clusters above $118,000 continue to clear.

A high-volatility range between $112,000 and $121,000 fits a market where ETF prints fluctuate between plus or minus $200 million, shutdown news causes the dollar to oscillate, and dealer positioning around $120,000 exerts a stabilizing effect into the October 31 expiry, according to Deribit data and historical patterns.

A retracement into the $106,000 to $111,000 range aligns with two or more days of outflows exceeding $300 million, a rebound in the dollar index above 99, an increase in real yields back toward or above 1.9 percent, and a definitive breach of the $111,000 short-term holder threshold.

To maintain a grounded analysis, the most pertinent indicators can be tracked intraday and translated into a functional map.

Signpost	Current/Reference	Bullish if	Bearish if
Aggregate US spot ETF net flow	See Farside, SoSoValue	≥ +$500M for ≥2 days	≤ -$300M for ≥2 days
Dollar Index (DXY)	~97.6 (Reuters)	< 98 sustained	≥ 99 sustained
10-yr TIPS yield	~1.77–1.78%	Drift toward 1.6–1.7%	≥ 1.9%
STH realized price	~$111,000 (Glassnode)	Daily close above	Daily close below
Liquidation pockets	$118K–$121K (CoinGlass)	Cleared with steady funding	Refill with negative funding
Options OI concentration	$120K/$125K (Deribit)	Pin breaks on flow impulse	Pin holds into Oct 31

The structural point remains that today’s movement is more about mechanics than narrative.

ETF creations convert macro inputs into actionable tickets, liquidation clusters translate flows into momentum, and on-chain cost basis provides a clear risk marker that aligns with how more systematic funds track trends.

The upcoming U.S. ETF prints will determine whether the recent month’s re-acceleration coincides with a weaker dollar.

The $111,000 short-term holder threshold remains the dividing line between an extension and a consolidation phase. The remaining liquidation zones above $120,000 are now sufficiently close to be significant if flows continue before options hedging re-establishes control.

The market will address the near-term question through these inputs rather than through commentary, and the final balance of ETF creations and redemptions will indicate whether the demand is expanding or diminishing.

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