Bitcoin's price broke through the $70,000 mark on Monday for the first time since March, climbing more than 4% to approximately $70,300 before paring some gains. Other major cryptocurrencies, including Ethereum and Solana, also advanced. The rally was primarily driven by short covering in the market. Despite uncertain prospects for a Middle East ceasefire, with Iran rejecting a temporary truce and demanding a full end to the conflict, an excessively pessimistic positioning structure began to adjust rapidly.
Diana Pires, Chief Business Officer at sFOX, noted that market sentiment was significantly bearish heading into the weekend, with a heavy accumulation of short positions. News related to ceasefire talks triggered large-scale liquidations, propelling prices higher. Data indicates that over $145 million in short positions were forcibly liquidated in the past 24 hours. According to CoinGlass, as Bitcoin's price climbed, more short positions were stopped out.
Damien Loh, Chief Investment Officer at Ericsenz Capital, stated that in a low-liquidity environment, shorts shifting to other assets and covering their positions exacerbated the "short squeeze" style price surge. However, from a longer-term perspective, Bitcoin remains within a consolidation range. Since the conflict involving Iran erupted in late February, Bitcoin has largely fluctuated between $60,000 and $75,000, briefly approaching $76,000 before retreating. For most of the past two weeks, its price has stayed below $70,000.
Blockchain data firm Glassnode pointed out that whenever Bitcoin approaches the $70,000 to $80,000 range, thin market liquidity and significant profit-taking pressure have limited the upside. Concurrently, the options market is shifting towards more defensive positioning. In derivatives markets, the largest open interest is concentrated in $60,000 put options. Data from Deribit, owned by Coinbase, shows investors are still hedging potential downside risks using put options.
On the other hand, institutional flows are showing signs of improvement. US-listed spot Bitcoin ETFs recorded approximately $22.3 million in net inflows last week, a notable recovery from the nearly $300 million in net outflows the previous week. Nevertheless, overall market participation remains subdued. Glassnode indicated that participation levels, whether on exchanges, in ETFs, or in on-chain activity, have not significantly recovered, suggesting the sustainability of the current rebound is still uncertain. Analysts believe that supporting a more solid uptrend will require synchronized improvements in trading volume, capital inflows, and on-chain activity.