The first cryptocurrency has once again found itself in the spotlight, breaking through the psychologically important level of $70,000. This level had not been conquered by bitcoin since June 2, and its return was accompanied by an impressive move: over the course of a day, the asset rose by approximately 11.5%, reaching $71,867. However, behind this outwardly confident growth lies a fragile structure that may not be as resilient as it seems at first glance.
Drivers of the move: politics and a cascade of liquidations
The key trigger for the surge was signals from Washington. This refers to the decision by the U.S. Treasury to double the volume of long-term bond buybacks — to at least $4 billion at a time — as well as Donald Trump's statement that authorities are seriously considering the possibility of a large-scale bitcoin purchase for the state reserve. These news items instantly fueled interest, but the real catalyst was precisely the cascade of forced short position closures.
The market turned out to be overloaded with shorts. According to my data, positions totaling approximately $3.38 billion were liquidated over the course of a day, of which the overwhelming majority — $3.12 billion — came from short trades. This is a classic short squeeze scenario: when the price moves up, traders are forced to buy back the asset to close losing positions, which further accelerates quotes. In just one day, the positions of 193,767 traders were "burned," with $1.76 billion in shorts closed on the bitcoin market itself.
Demand returns, but cautiously
A positive point is the recovery of demand in the spot market. My analysis shows that the bitcoin apparent demand indicator has reduced its negative value from -206,000 BTC, recorded on July 23, to nearly zero over the last 30 days. This is the first such signal since February 26. Historically, when the indicator moves into positive territory, the median return for BTC over the subsequent 60 days is 18.1%, and the probability of growth reaches 78%. This is a powerful argument in favor of a continuation of the upward trend.
On-chain data warns of risks
However, not everything is so clear-cut. Network data indicates that the current growth may be premature. The average cost basis for short-term holders is at the level of $68,500, and as long as the price remains above it, the market technically looks healthy. But the average market purchase price of all coins in circulation is $75,800 — a level that bitcoin has not yet surpassed.
More alarming is the realized profit/loss ratio. It currently stands at only 0.75, significantly below the threshold value of 2, at which a sustained trend reversal is typically recorded. Until this indicator returns above 2, any growth should be viewed as a local rally rather than a change in the market regime.
My expert opinion: The current surge is more of a technical bounce against the backdrop of favorable macro news than a fundamental reversal. The market is still in an accumulation phase, and to confirm the bullish scenario, bitcoin needs to establish itself above $75,800. Otherwise, we risk seeing another correction toward the $68,500 level, where the support line for short-term holders lies. I recommend exercising caution and not chasing the price at current levels.