Short Squeeze Erupts…Is Bitcoin Reigniting?

▲ Bitcoin, Gold ©CoinReaders

As Bitcoin reclaimed the $80,000 mark, institutional funds poured back in, signalling that the market has entered a 'typical recovery rally' phase.

According to investment media FXStreet on May 5 (local time), during Bitcoin's (BTC) recovery to $80,000, US spot Bitcoin ETFs recorded a net inflow of $532.21 million in a single day. This continues a three-consecutive-trading-day net inflow trend, indicating a strengthening of institutional demand.

Specifically, BlackRock's iShares Bitcoin Trust recorded the largest inflow at $335.49 million, followed by Fidelity Fund with $184.57 million. Morgan Stanley ETF also recorded an inflow of $12.16 million, while other products saw no capital inflow. This trend is particularly significant as it marks a rebound after $490.63 million was withdrawn over the previous three days.

Bitcoin is currently trading around $81,029, up 1.5% over a 24-hour period. Bitunix analysts interpreted this surge as "a rebound following the recovery of risk asset preference after the US-Iran ceasefire." In particular, a short squeeze (buying pressure occurring to liquidate or cover short positions) in the $79,500-$81,000 range strengthened upward momentum, and the $77,000-$78,000 range has formed a new support level.

However, the market's variable remains the macroeconomic environment. The US launched 'Operation Freedom,' deploying 15,000 personnel to the Strait of Hormuz, which has reignited geopolitical tensions and is pointed out as a factor that could disrupt the ceasefire. Simultaneously, the US non-farm payrolls data and Federal Reserve statements to be released this week are considered key variables that will determine the direction of risk assets overall.

Ethereum (ETH) spot ETFs also showed a rebound. $61.29 million flowed in during the day, and cumulative net inflows exceeded $12 billion. The market now believes that cryptocurrency prices have transitioned from being driven solely by internal supply and demand to a phase where 'macroeconomic variables and liquidity structures' are simultaneously at play.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*