Bitcoin's rise to $79,000 is fueled by $1.1 billion in short liquidations, indicating a potential risk of market correction, according to analysts.
Bitcoin's recent climb to $79,000 is largely attributed to activity in the derivatives market, according to CryptoQuant analyst Carmelo Aleman. He noted that the surge is indicative of a short squeeze rather than strong spot demand.
“As long as price depends more on derivatives than on solid spot validation, the structure will remain vulnerable to reversal,” Aleman stated.
The price of Bitcoin increased from $76,351 to $79,447, marking a rise of 4.05%. During this time, open interest in the market surged from $24.88 billion to nearly $28 billion, suggesting increased leverage in futures trading.
Massive Short Liquidations
The upward trend in Bitcoin’s price led to significant short position liquidations, with Aleman estimating that Bitcoin liquidations reached approximately $607.9 million, while Ethereum liquidations were around $580.9 million. In contrast, long position liquidations totaled about $111 million, reinforcing the idea that the price rise was primarily due to a short squeeze.
“The price increase was not due to dominant spot interest, but rather pressure in the derivatives market, indicating the fragility of the movement,” he added.
As long as the rally is predominantly driven by futures, the risk of a market correction persists.
Despite this, Glassnode reported that sentiment among major derivatives market players remains optimistic, with whales on the Hyperliquid platform increasing their long positions in anticipation of further price growth.
April's Strong Performance
April may prove to be one of Bitcoin's best months in over a year, with the asset's price climbing 14.3% in the past 24 days, the highest increase since November 2024. Since February, Bitcoin has appreciated by about $20,000, nearing the upper end of a multi-month price range.
Currently trading around $77,500, Bitcoin has seen strong institutional support, with spot Bitcoin ETFs acquiring roughly 19,000 BTC in the last five days—about nine times the new supply during that timeframe, according to Bitwise's André Dragosch.
Long-Term Market Signals
Michaël van de Poppe, founder of MN Trading, highlighted that Bitcoin's Sharpe ratio, which measures returns adjusted for risk, has reached levels comparable to previous market bottoms. Historically, such ratios have preceded significant price increases, with past cycles showing gains of 120-135% over a year and 400-800% over two years.
Van de Poppe projected that Bitcoin could reach $100,000 by the third quarter of 2026, potentially setting a new all-time high shortly thereafter.
Market Dynamics and Key Levels
In the near term, he anticipates Bitcoin may rise to $86,000, which could also lead to altcoins appreciating by 30-40%. He identified $75,000 as a critical support level, emphasizing that Bitcoin needs to remain above this mark to sustain momentum. Traders view $80,000 as a pivotal threshold for bulls, who need to break through this level to maintain upward momentum.
As of April 24, the fear and greed index reached its highest point since January, reflecting the current market sentiment.
