Shorts Capitulate at $97,000: Why BTC’s Leverage-Driven Rally May Be Just Starting

Bitcoin at $96K–$97K: Leverage-Driven Short Squeeze Meets OG Restraint and Whale Hedging — Fragile Upside or Setup for Reset?

Bitcoin (BTC) has staged a sharp rebound toward the $96,000–$97,000 zone, fueled primarily by a powerful short squeeze that wiped out millions in bearish exposure. According to Glassnode, this was the largest single short-liquidation event across the top 500 cryptocurrencies since October 10, 2025. Liquidation spikes aligned tightly with BTC's push to local highs, as forced buybacks chased the price higher and reinforced upside momentum.

This leverage-driven behavior has been building since late 2025 but intensified as Bitcoin refused to retrace meaningfully from elevated levels. If liquidations continue at this pace, BTC could extend toward the $100,000–$105,000 zone on momentum alone. However, sustainability remains questionable — past squeezes have shown that lasting gains typically require spot demand to replace leverage as the primary driver.

OG Holders Shift: From Distribution to Restraint

A significant change is occurring among long-term ("OG") Bitcoin holders. STXO (Spent Transaction Output) data from coins dormant for over five years shows a clear slowdown in spending activity. CryptoQuant confirms that OG distribution peaked earlier in the cycle (near 3,800 BTC per period), then cooled to 3,200 BTC, and further to 2,200 BTC.

This lighter selling reduces immediate overhead supply in the short term, supporting price stability. More importantly, in the long term, OG restraint historically aligns with accumulation phases rather than late-cycle distribution. When early holders stop selling aggressively, it often signals growing conviction in higher future prices.

Whale Hedging vs. Retail Chasing: Classic Divergence

On-chain positioning reveals a clear split:

• Whales have begun unwinding long exposure and rotating into shorts — a deliberate defensive shift often seen when they detect crowded positioning or late-cycle behavior.
• Retail traders tend to move in the opposite direction, chasing upside momentum by adding leveraged longs as volatility expands.

A similar divergence occurred when Bitcoin approached $69,000 in late 2025: whales flipped short while retail piled into longs. The result was a nearly 20% correction to $56,000 before stabilization.

This recurring pattern suggests a potential shakeout or cooling phase ahead. If leverage unwinds aggressively, price could retrace significantly before any sustainable continuation emerges.

Current Market Structure: Leverage as Primary Driver

The overall setup is clear:

• Short liquidations have lifted the price and tightened supply in the near term.
• OG selling has slowed, reducing organic distribution pressure.
• Whales have turned defensive, hedging against crowded positioning.

These factors create a fragile upside — momentum is being driven primarily by leverage (short squeezes, forced buybacks) rather than broad spot accumulation. Without spot demand stepping in to replace leverage as the dominant force, any further extension remains vulnerable to a corrective reset.

Key Risks and Scenarios

• Upside continuation — If spot flows (ETF inflows, corporate buying) accelerate and leverage remains supportive, BTC could push toward $100,000+ with reduced downside risk.
• Corrective phase — If funding rates cool, open interest resets sharply, or macro catalysts turn negative, a retracement becomes likely — potentially testing lower supports before resuming higher.
• Volatility outlook — The current environment remains highly sensitive to leverage dynamics. Any unwind could trigger sharp moves in either direction.

The recent rally reflects leverage reasserting control rather than a broad-based structural shift. While the squeeze has provided temporary relief and reduced immediate selling pressure, true sustainability will depend on spot demand taking over.

Traders should watch ETF flows, funding rates, open interest trends, and whale positioning closely — these will ultimately determine whether Bitcoin's current momentum marks the beginning of a new leg higher or simply another leverage-fueled extension vulnerable to reset.

Georgi Minev publication: "Shorts Capitulate at $97,000: Why BTC’s Leverage-Driven Rally May Be Just Starting" was written for 24crypto.news

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