- Bitcoin climbed above $72,000 for the first time since May after a record $2.75 billion in BTC short liquidations.
- Analysts say ETF demand, improving liquidity conditions and regulatory developments are giving the rally support beyond forced buying.
- Holding above $70,000 could strengthen the breakout, while the $69,000-$69,700 area is emerging as an important support zone.
Bitcoin extended its recovery on Thursday, breaking above $72,000 as momentum continued following one of the largest short squeezes the crypto market has ever seen.
BTC traded around $72,345, extending a rally that accelerated Wednesday as Treasury market developments, new SEC crypto proposals and a White House meeting with major industry executives improved sentiment.
Record Bitcoin Short Liquidations Fuel Breakout
Around $2.75 billion worth of Bitcoin short positions were liquidated Wednesday as prices surged through levels that had contained BTC since June. The forced closure of bearish positions added considerable buying pressure and helped accelerate the move.
However, analysts argue that the short squeeze was not the only force behind the rally. Improving ETF flows, falling longer-term Treasury yields and a potentially clearer regulatory environment in Washington are also supporting demand.
Bitcoin Faces a Major $70K Test
With much of the short squeeze already completed, attention is shifting toward whether spot buyers can sustain Bitcoin’s momentum.
Nansen analyst Nicolai Søndergaard said continued acceptance above $70,000 would keep the technical outlook constructive. A decline toward roughly $69,000 to $69,700 could represent a normal retest of the breakout rather than an immediate reversal.
The risk is that leveraged traders become overly bullish following the rapid move. Without continued spot and ETF buying, crowded long positions could introduce another source of volatility.
Bitcoin Demand Shows Signs of Recovery
CryptoQuant founder Ki Young Ju said demand across Bitcoin spot and perpetual futures markets has turned positive simultaneously for the first time since BTC reached its October 2025 all-time high.
The shift remains relatively modest, but sustained demand could become an important signal that Bitcoin’s lengthy bear phase is ending. Trading activity has also rebounded sharply, with 24-hour volumes reportedly climbing roughly fivefold from their recent yearly low.
Bitcoin now faces a different challenge from the one it encountered earlier this week. The short squeeze helped BTC escape its range, but sustained buying above $70,000 will determine whether the breakout develops into a broader crypto recovery.
