The first cryptocurrency has made its presence known again, breaking through the psychologically important level of $70,000. This event, the first since June 2, was accompanied by a powerful move, but my analysis of the derivatives market and on-chain data suggests it is too early to celebrate. Over the course of a day, positions worth approximately $3.38 billion were forcibly closed, pointing to a classic short-squeeze scenario.
The mechanics of the rally: politics and liquidations
The growth was sparked by signals from Washington. The U.S. Treasury's decision to double the volume of long-term debt buybacks (at least $4 billion at a time) added liquidity, and Donald Trump's statement about the possibility of a large government purchase of bitcoin fueled the fire. The market was overloaded with short positions, and each new wave of growth triggered a cascade of forced closures, spinning the flywheel further.
The statistics are telling: over 24 hours, positions of 193,767 traders were liquidated. Shorts accounted for $3.12 billion against a modest $277 million for longs. For bitcoin itself, positions worth $1.76 billion were closed. At the moment, BTC is trading at $71,867, showing a gain of about 11.5% in a day. However, such vertical moves often exhaust themselves as quickly as they begin.
Fundamental signal: spot demand is reviving
Contrary to skeptics, in CryptoQuant data I see an encouraging trend. The visible demand indicator on the spot market has recovered from minus 206,000 BTC (July 23) to nearly zero over the past 30 days. This is the first approach to the positive zone since February 26. Historically, when this metric crosses the zero mark, bitcoin shows a median return of 18.1% over the following 60 days, with a positive outcome recorded in 78% of cases. This is a serious argument in favor of the sustainability of the recovery.
Resistance ahead: Glassnode warns
Despite the positivity, Glassnode on-chain analysts remind us of unclosed gaps. The cost basis of short-term holders (STH) is at $68,500, and the price is now above it. But the average market price across all holders is $75,800. As long as the price is below this mark, the market is in a capitulation phase, vulnerable to macroeconomic shocks. The Spent Output Profit Ratio (SOPR) is 0.75, significantly below the threshold of 2, at which a sustained trend reversal is typically recorded.
My verdict: the current surge is a powerful but as yet unconfirmed signal. A breakout and consolidation above $75,800 amid growing spot demand will be the trigger for a change in market regime. Until then, any growth should be viewed as a local rally within a sideways trend, not the start of a new bullish supercycle. The market needs time to digest this momentum and prove it can hold the gained positions.