Bitcoin rally driven by short squeeze on Binance futures

According to CryptoQuant analyst BorisD, the recent rise in Bitcoin’s price was not driven by genuine buying pressure on the spot market, but by a series of forced closures of short positions on the Binance futures market. The Binance Short Squeeze indicator reached a level of 6.94, the highest point since November 2024. Bitcoin currently stands at $77.000, a rise of 7.2% over the past 24 hours.

Bitcoin is available at OKX and Bybit.

In short:

• The Bitcoin rally was driven by mass short liquidations on Binance futures, not by spot purchases.
• The Binance Short Squeeze indicator reached 6.94, the highest level since November 2024.
• Analyst BorisD warns of a pullback if spot demand does not take over the move.

Short squeeze pushes Bitcoin higher

In his analysis, CryptoQuant analyst BorisD explains that Bitcoin’s price movement this week was largely mechanical in nature. Traders with open short positions were forced to close their positions, which automatically generated buying pressure and pushed the price up further.

According to BorisD, the rise therefore resembles a chain reaction in the futures market, with each closure triggering the next. CryptoQuant described it as a “mechanical waterfall of position closures” on the Binance futures market.

Earlier this week, Blockchain Stories already reported on the billions in short positions that were put at risk by the rise. The latest data from CryptoQuant now confirms that those liquidations did indeed take place on a large scale.

Pullback risk remains real

BorisD warns that the rally is vulnerable as long as the spot market does not take over the move. A short squeeze drives the price up through forced closures, but that pressure stops as soon as the open short positions have been liquidated. If no new buyers from the spot market emerge afterwards, the price could quickly fall back.

That risk does not stand alone. Glassnode previously warned that the current recovery has the characteristics of a local rally rather than a broader trend reversal. On the other hand, Bitcoin ETFs attracted $606 million on 20 August, which points to sustained interest from institutional investors.

Whether the spot market can generate sufficient demand to sustain the rise will become clear in the coming days.