Bitcoin has surged to $86,000 after overcoming a significant resistance level at $82,000, but analysts caution that the sustainability of this rally hinges on continued spot buying as leverage increases.
According to Krisztian Sandor and Helene Braun, Bitcoin's recent uptick has led to the liquidation of numerous short positions, resulting in a fresh influx of leveraged bets. This surge in price has also resulted in approximately $750 million in bearish crypto derivative positions being wiped out, as reported by CoinGlass data.
Jim Ferraioli, head of crypto research at Schwab, noted, “Bitcoin is up 5% this morning due to the liquidation of short perpetual futures contracts.” Following this breakout, the open interest in futures—essentially the total value of outstanding derivative contracts—has surged by nearly $2 billion, indicating that traders are eager to engage in new leveraged positions.
Despite the positive momentum, analysts from the crypto analytics firm Nansen highlighted that while the price has turned bullish, the shift in trader positioning from bearish to bullish has been more gradual. The U.S. spot Bitcoin ETFs experienced outflows totaling $746 million on Tuesday and Wednesday due to the Senate's failure to advance the Clarity Act and a rate hike from the Federal Reserve. However, this trend reversed sharply with inflows of $160 million on Thursday and $433 million on Friday, marking a significant recovery.
Furthermore, this recent rally has allowed Bitcoin ETF holders to finally see profits, as the average cost basis for U.S. BTC ETF buyers now stands at $82,225.
Potential for a $90,000 Test
The breakout past $82,000 has garnered attention since this level had previously stalled Bitcoin's price. The last attempt to breach this barrier in May resulted in a drop below $60,000 in June.
With the current upward trend, $90,000 is viewed as the next key psychological target. Nicolai Sondergaard from Nansen suggested monitoring $87,000 first, followed by the crucial $90,000 mark and then around $92,000. Jasper De Maere, an OTC trader at Wintermute, also sees a potential test of $90,000 as likely.
This latest price surge occurred despite recent macroeconomic and political turbulence, including the Senate's failure to advance the Clarity Act and a rate hike from the Federal Reserve. Additionally, Bitcoin has reclaimed its 50-week moving average, a long-term trend line that traders often use as a signal. De Maere remarked that this trend line had acted as resistance during previous bear markets, suggesting that breaking through it may provide traders with a positive trading signal.
However, caution remains among traders. Chris Sullivan, co-portfolio manager at Hyperion Decimus, views this movement as the onset of a new bullish cycle but anticipates a significant correction following the rally. “This should be the first primary wave/rally of the new bull market,” he stated, while also warning of a large correction once the rally exhausts itself.
Despite the optimism surrounding the rally, some traders are speculating about a potential new all-time high in Bitcoin's price on social media. Nevertheless, De Maere cautioned that discussions about surpassing Bitcoin's previous peak of $126,000 in October 2025 may be premature, as early bull markets are often accompanied by considerable volatility.
Challenges Ahead for the Rally
The crucial factor now is whether demand in the spot market, where investors purchase Bitcoin directly, can keep pace with the movements in derivatives. Sondergaard emphasized the need for sustained spot and ETF flows, warning that without them, the current breakout could devolve into a leverage-driven move susceptible to reversal from rising government bond yields or geopolitical shocks.
The rapid accumulation of leverage poses risks if the underlying spot demand does not match it. A stark reminder of this danger occurred on October 10, when Bitcoin's price plummeted from near-record levels, resulting in approximately $19 billion in liquidations during the largest cascade in the market's history.
Ferraioli noted that altcoins have also started to gain momentum alongside Bitcoin, indicating a broader risk appetite among traders. The real test, he added, is whether activity on smaller blockchains increases instead of merely witnessing price rebounds after prior overselling.
Investors will be closely monitoring several factors in the coming days, according to De Maere: ETF flows, signs of excess in perpetual futures through inflated open interest or funding rates, and Friday's options expiry. "So far this rally is looking pretty healthy," he concluded.
Read more: Bitcoin’s price has cleared a key hurdle that has historically preceded major bull runs