The flagship cryptocurrency ended the week with a powerful price surge, coming close to the $64,000 mark. At the local peak, the asset settled at $63,900, a direct result of the forced liquidation of short positions worth hundreds of millions of dollars.
This momentum was a logical conclusion to the recovery phase following the recent decline. Recall that on July 1, the price dropped to a local low of $58,293. However, weak macroeconomic data on the US labor market dramatically changed investor expectations regarding the Federal Reserve's next steps. The revision of these expectations allowed the leading cryptocurrency to quickly compensate for previous losses.
Weak Employment Report Triggers Short Squeeze
The key trigger for the shift in market sentiment was the latest US non-farm payrolls report. The statistics showed that the American economy created only 57,000 new jobs in June. This figure was significantly worse than analysts' preliminary forecasts. Consequently, the likelihood of an imminent tightening of monetary policy by the Fed decreased substantially. Notably, earlier this week, bitcoin's quotes had already received support following the Fed Chair's statements regarding inflation risks.
Concurrently, the market saw a decline in US Treasury bond yields and a simultaneous weakening of the US dollar. These factors reduced the costs associated with holding the flagship digital asset and accelerated the exit from the bearish trend that prevailed in June.
The spot bitcoin ETF sector provided additional support to the market. After a prolonged wave of capital outflows, investment funds finally recorded a net inflow of funds. Institutional platforms are still digesting the record June losses, which totaled $4.5 billion.
Short Sellers Failed to React in Time
Traders lost over $450 million on short positions in the derivatives segment when bitcoin broke through the $62,000 level. The dynamics became a classic example of a short squeeze: forced closures of short positions spurred further price growth, triggering liquidations for the next wave of short sellers.
Ether rose approximately 4% over the day and nearly 10% over the week, while Solana gained about 19% — the best result among major tokens. Institutional flows have not yet fully confirmed the move: ETF funds continue to recover after their worst month since launch.
At this point, the question remains open as to whether the current short squeeze can evolve into a full-fledged long-term trend. Of course, forced liquidation of margin positions always causes sharp price fluctuations, but it rarely forms stable organic demand. Additionally, the cryptocurrency market enters the third quarter under conditions of reduced liquidity. This specific factor could amplify market volatility in either direction.
My analysis: The current surge is a technical bounce against a backdrop of macroeconomic relief, not the start of a new bull rally. For a sustained move above $65,000, a steady inflow of capital into ETFs and renewed interest from institutional investors are necessary, not just a one-time liquidation of overheated shorts.