Bitcoin moved back above $80,000 this week as a relief rally in risk assets spilled into crypto and triggered a fresh wave of short liquidations. On Wednesday, the Federal Reserve raised interest rates by 25 basis points, its first increase since 2023. But the accompanying dot plot showed a median policy rate of 4.1% through the end of 2027, a path that points to only one more move rather than an extended tightening cycle.
Crypto had more ground to recover than other risk assets. Earlier in the week, the failure of the Clarity Act to clear a Senate procedural vote pushed Bitcoin below $75,000. The rebound that followed the Fed decision kept building through the week, and traders turned back to the $80,000 level only days after the bill’s defeat appeared to set off panic selling.
In the latest session, the shift was visible across derivatives markets. More than $445 million in short positions were liquidated across crypto, with Bitcoin alone making up over $230 million, more than half of the total.
A short position is a derivatives trade that bets on an asset falling in price rather than rising. Instead of buying the asset outright, the trader uses contracts tied to its price. To open a short, the trader typically borrows the asset through a broker and sells it at the current market price. If the price rises, the trader then has to buy it back at a higher level to return it, locking in a loss.
That structure makes short selling especially risky because losses are theoretically unlimited. In leveraged markets, traders post collateral to open a short. If price moves too far against the position, that collateral can be liquidated and the trade is closed automatically to cover losses. The forced buying that follows can push prices even higher and trigger more liquidations in sequence, creating what traders call a short squeeze.
Bitcoin was up 5.88% on the day at $80,846, after opening at $76,355. It traded between an intraday low of $76,236 and a high of $80,857. The move recovered part of what has been a harsh year, though Bitcoin still remained nearly 20% below its previous all-time high.
Technical indicators show strength, but the move has been fast
The chart setup supports the rally, though it also suggests the pace has been quick.
The Average Directional Index, or ADX, measures trend strength regardless of direction. For Bitcoin, ADX stood at 40.6, well above the 25 level many traders use to confirm that a real trend is in place. The positive directional line, DI+, was also above DI-, showing buyers remained in control.
The moving-average structure also leaned bullish. The 50-day exponential moving average was trading above the 200-day EMA, reinforcing that the broader setup had turned positive. When the shorter-term average crosses above the longer-term one, traders refer to it as a golden cross, a classic bullish signal. Bitcoin entered a golden cross last Saturday, and the gap between the two averages has been widening slowly each day since then.
The Relative Strength Index, or RSI, which tracks overbought and oversold conditions on a 0-100 scale, was at 63.3. That reading remained firmly bullish without yet entering the danger zone above 70. Still, the indicator has been climbing quickly, a point that may keep some traders cautious.
Volatility compression has lasted 11 bars
Another signal adding tension comes from the Squeeze Momentum Indicator. It has remained on for 11 consecutive bars, meaning volatility has been compressed for nearly two weeks. Traders watch these periods closely because the longer the squeeze lasts, the more forceful the eventual release of volatility can be. A contraction reading of 8.06% suggests that release may still lie ahead rather than behind.
After heavy compression, prices often break sharply in one direction or the other. That has led some analysis to consider the possibility of a Bart Simpson pattern: a large green candle, followed by a compression phase, and then a large red candle that wipes out the earlier gains.
Levels in focus
Immediate resistance sits at $82,281, the top of the current Fibonacci leg and the level bulls need to close above to confirm a breakout.
Below the market, support comes in at $75,569, the 61.8% retracement, and then more firmly at $68,858. That lower level marks the origin of the current leg and would need to break for the bullish structure to come into serious doubt.
With ADX confirming trend strength, the setup favors continuation in the near term. At the same time, the report noted that the market leaves little room for another 6% day without some cooling off first.
Decrypt also noted that the views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.
