At the start of the new week, Bitcoin (BTC) demonstrated impressive upward momentum, nearly reaching the $64,000 mark. At one point, the asset recorded a local high of $63,900, confidently continuing the rally that began over the weekend. This surge triggered the forced liquidation of short positions worth hundreds of millions of dollars.
The market has completed a phase of sharp recovery following a recent decline. Recall that on July 1, the price dropped to a local low of $58,293. However, weak U.S. labor market data significantly adjusted investor expectations regarding the Federal Reserve's next steps. This shift in expectations helped the leading cryptocurrency quickly offset its previous losses.
Weak Employment Report Triggered a Short Squeeze
The main catalyst for the change in market sentiment was the latest U.S. non-farm payrolls report, released on Thursday. The data showed that the U.S. economy added 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 has decreased considerably. Notably, earlier this week, Bitcoin's price had already received support following Warsh's comments on inflation risks.
Alongside this, the market saw a decline in U.S. Treasury bond yields and a simultaneous weakening of the U.S. 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 fueled further price increases, triggering liquidations for the next wave of short sellers.
Ether rose by about 4% over the day and nearly 10% over the week, while Solana gained around 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 creates stable organic demand. Additionally, the cryptocurrency market is entering the third quarter under conditions of reduced liquidity. This specific factor could amplify market volatility in either direction.
Expert comment: The current surge is more of a technical correction and a "squeezing out" of excessive leverage, rather than the start of a new bullish cycle. For a sustained move above $65,000, a renewed inflow of fresh capital is needed, not just a redistribution of funds between long and short positions.