Bitcoin Price Jumps 4%, but $1.19B Short Squeeze Signals Fragile Rally Ahead

Bitcoin Surges 4%, but Analysts Warn the Rally May Be Built on Weak Foundations

Bitcoin (BTC) posted a strong 4% weekly gain, climbing from $76,351 to $79,447, reigniting bullish sentiment across the crypto market. However, despite the impressive move, analysts are warning that the rally may not be as healthy as it appears.

According to CryptoQuant analyst Carmelo Aleman, the recent Bitcoin surge was not fueled by genuine spot market demand or fresh institutional inflows. Instead, the price increase was largely driven by derivatives activity, particularly a massive $1.19 billion short squeeze that forced bearish traders to exit their positions.

This type of rally, while powerful in the short term, often carries significant risks. Without strong spot buying to support the move, Bitcoin’s current structure could remain vulnerable to a sharp reversal.

BTC Rally Fueled by Futures Market, Not Real Buying Pressure

Aleman’s analysis points to a critical issue behind Bitcoin’s latest upward momentum: the rally was primarily driven by leveraged positions in the futures market rather than real capital entering the spot market.

One of the clearest signs of this was the sharp rise in open interest, which measures the total value of outstanding futures contracts across exchanges.

During Bitcoin’s rally:

Open interest surged from approximately $24.8 billion
It quickly climbed to nearly $28 billion

This increase indicates that traders were aggressively adding leveraged positions using borrowed funds, rather than investors purchasing Bitcoin directly on the spot market.

As Bitcoin’s price pushed higher, traders holding short positions were forced to buy back BTC to close their trades, creating a chain reaction known as a short squeeze.

This artificial buying pressure accelerated the rally, but it did not reflect true market demand.

Aleman explained:

“As long as price depends more on derivatives than on solid spot validation, the structure will remain vulnerable to reversal.”

This warning highlights a common problem in crypto rallies—when price gains are built on leverage instead of actual investor conviction, the upside can quickly turn into downside volatility.

$1.19 Billion in Short Liquidations Shocked the Market

The most dramatic confirmation of this derivatives-driven move came from the liquidation data.

On April 22, Bitcoin short liquidations across major exchanges exceeded $607 million in a single day, marking one of the most aggressive short squeezes seen in recent weeks.

Ethereum (ETH) also experienced significant forced liquidations:

ETH short liquidations reached approximately $581 million

Combined, Bitcoin and Ethereum short liquidations totaled roughly $1.19 billion in just one trading session.

This wave of forced buying created intense upward momentum, rapidly pushing prices higher across the board.

By comparison, long liquidations were far smaller:

Combined long liquidations totaled only around $111 million

This imbalance clearly shows that the market move was dominated by short sellers being squeezed out rather than by confident buyers stepping in.

Such rallies often look bullish on the surface, but analysts caution that they can fade quickly once liquidation-driven momentum disappears.

Open Interest Near $28 Billion Raises Risk of Volatility

The rise in open interest to nearly $28 billion also increases the risk of future market instability.

High open interest means a large number of traders remain exposed to leveraged positions. This creates conditions where sudden moves—either upward or downward—can trigger another round of forced liquidations.

In highly leveraged environments:

Sharp price drops can trigger long liquidations
Sharp price increases can trigger short liquidations
Both scenarios increase volatility dramatically

This is why analysts remain cautious despite Bitcoin’s strong weekly performance.

If spot buyers fail to support the current price zone, the market could face another rapid correction.

$9.87 Billion Options Expiry Adds Fresh Uncertainty

Adding even more complexity to Bitcoin’s short-term outlook is the expiration of a massive volume of options contracts.

According to Deribit data, approximately $9.87 billion worth of Bitcoin and Ethereum options contracts are expiring today, creating additional pressure on price action.

Bitcoin Reclaims $80K as Fed Pause Signals Trigger $415M Short Squeeze

Options expiry events often trigger increased volatility, especially when market prices are trading far from so-called max pain levels—the price point where the greatest number of options expire worthless.

For Bitcoin:

Current market price: around $79,000
Max pain level: approximately $72,000
Put-to-call ratio: 0.93

A put-to-call ratio near 1.0 suggests that bearish and bullish bets are almost evenly balanced, signaling uncertainty rather than strong directional conviction.

Since BTC is trading significantly above its max pain level, traders are closely watching whether the market will hold these gains or face downward pressure as expiry approaches.

Ethereum Shows Slightly Stronger Bullish Positioning

Ethereum’s options market currently appears slightly more optimistic than Bitcoin’s.

For ETH:

Current trading price: around $2,315
Max pain level: approximately $2,200
Put-to-call ratio: 0.72

A lower put-to-call ratio indicates a stronger bullish tilt, suggesting traders are placing more upside bets on Ethereum compared to Bitcoin.

While Ethereum also experienced major short liquidations, its derivatives positioning currently reflects slightly stronger confidence from market participants.

Still, both assets remain highly sensitive to macro conditions and futures market volatility.

Can Bitcoin Break Above $80,000 Again?

Technically, Bitcoin’s broader trend remains constructive.

Throughout April, BTC has continued forming:

Higher highs
Higher lows

This structure supports the argument that the market remains in an overall bullish phase.

However, analysts stress that a sustainable breakout above the critical $80,000 resistance level will likely require stronger spot market participation.

Without real buyers entering the market, Bitcoin risks becoming trapped in a leverage-driven cycle where rallies are quickly followed by sharp corrections.

If institutional demand, ETF inflows, and genuine spot accumulation increase, Bitcoin could make another serious attempt to reclaim and hold above $80,000.

But if derivatives continue to dominate price action, traders should remain cautious.

Why Spot Demand Matters More Than Futures

Spot market demand is considered healthier because it reflects real investment activity rather than temporary leveraged speculation.

When investors buy BTC directly:

They create stronger price support
Volatility tends to decrease
Uptrends become more sustainable

By contrast, futures-driven rallies:

Depend heavily on leverage
Can reverse suddenly
Often create false breakouts

This distinction is why analysts like Carmelo Aleman are urging caution despite Bitcoin’s recent strength.

The market may look bullish, but underneath, the foundation remains fragile.

Final Outlook: Strong Rally, but Caution Still Needed

Bitcoin’s 4% weekly surge has certainly improved short-term sentiment, but the data suggests the rally may be less stable than it appears.

With:

$1.19 billion in short liquidations
Open interest rising to $28 billion
Nearly $10 billion in options expiry
Limited spot market confirmation

…the market remains highly vulnerable to volatility.

For now, Bitcoin bulls still have momentum, but the next major move will depend on whether real buyers step in to support prices above current levels.

If spot demand strengthens, BTC could break decisively above $80,000.

If not, this rally may prove to be just another short squeeze before the next correction begins.