- Bitcoin hit $106K, driven by the Fed’s rate pause.
- Short squeeze liquidated $600M in crypto positions.
- Prices fell to $104K, down 2.61% in 7 days.
The Federal Reserve’s pause on interest rates led to Bitcoin rising even past 106,000. The dramatic shift caused a short squeeze, liquidating over $600 million of crypto derivatives. The prices fell from the previous week to the current level of $104,502.64, recording a 2.61 percent change in price since the previous week but an increment of 60.63 percent per annum.
Short Squeeze Fuels Bitcoin’s Climb
The price of bitcoin started to rise at around 21:00 UTC on a Sunday and increased by $2,500 in only one hour. The step was boosted by weak liquidity over the weekend and algorithmic purchases that forced short sellers to close. This short squeeze also bid the prices higher, clearing out $460 million worth of longs and $220 million worth of shorts in futures of such assets as Ether, Solana, and Dogecoin.
Traders justified the rally by noting that it is due to the pause taken by the Fed, which eased the pressure on risk assets. The action of the central bank also meant that the monetary policy might loosen, a move that gave greater confidence to investors in cryptocurrencies. However, profit-taking occurred soon after, pulling the Bitcoin back down to the levels of $103,000 to eventually stabilize at the value of about $104,500.
The macroeconomic uncertainty, including a possible downgrade of the U.S. credit rating by Moody’s and growing worries of inflation, kept traders in the shade. By downgrading it has thrown off volatility to the markets, and the yields on the 30-year Treasury by the U.S were forced to above 5%. However, these headwinds did not put a halt to the resilience of Bitcoin, which validated its utility as a hedge against fiscal problems.
Investors reacted to a proposed spending bill in the U.S., a move that boosted capital inflow to Bitcoin. The bill can increase national debt in trillions, which is a reason of worry in terms of Treasury premiums. One of the players in the market asserted that money is being moved to Bitcoin to counter the risks of the growing debts and rising yields.
Volatility Signals Caution for Traders
Its inability to stay over $106,000 demonstrated resistance in the short term for Bitcoin. One of the key barriers is the 31,000 BTC at the price of 106,600 dollars. This cost basis has not been sold by holders, which implies a high level of conviction but potential selling pressure in case the price breaks out.
Other cryptocurrencies faced sharper declines. In the previous 24 hours, Solana, Dogecoin, and XRP fell by over 4 percent, and the CoinDesk 20 Index lost more than 2 percent. The broader market reaction was one of caution because there was a recovery of institutional flows and spot ETF momentum.
The latest statistics show that Bitcoin has been moving sideways over the past week, and volatility is expected to persist. The pause of the Fed has justified the optimism, but there is a threat of tariffs and uncertainty of the fiscal policy that can lead to further fluctuations.
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