Bitcoin Breaks $116K as Short Squeeze and Trade Optimism Ignite Market Momentum
Bitcoin, ether, and other major cryptocurrencies surged late Sunday, lifted by a mix of trader optimism over improving macroeconomic conditions and a wave of short liquidations that accelerated price gains across the market.
Bitcoin climbed 3% over the past 24 hours to trade at $116,179 — its highest point in two weeks. Ether jumped 6% to $4,187, while XRP and BNB each rose around 2%. Solana led the gains among altcoins, rallying 5.7%.
Market observers attribute the upswing to strengthening macroeconomic sentiment and technical momentum, supported by tightening on-chain supply. The rise aligns with reports that the United States and China have reached a preliminary framework for a potential trade deal, set to be discussed during the upcoming meeting between Donald Trump and Xi Jinping in South Korea this Thursday.
The improving tone in global trade relations has been met with enthusiasm across risk assets, including digital currencies. Traders see the potential easing of supply chain constraints and renewed cross-border cooperation as supportive factors for the broader economy.
Adding to the positive setup, the Federal Open Market Committee (FOMC) is expected to announce another interest rate cut during its meeting this Tuesday and Wednesday. Data from the CME Group’s FedWatch Tool shows a 96.7% probability of a 25-basis-point reduction, bringing rates down to a range of 3.75%–4.00%.
Massive Short Liquidations
As prices climbed, short sellers were caught off guard. Within a span of 30 minutes, roughly $160 million in short positions were wiped out, triggering a rapid price surge. Coinglass data indicates that total short liquidations topped $347.5 million over the past day, including $195 million in just the last four hours.
This sequence of events marks a classic short squeeze — where bearish traders are forced to cover their positions as prices rise — amplifying upward volatility in Bitcoin and Ether futures markets. Analysts suggest that this move could be the start of a more extended bullish cycle as market sentiment shifts.
Santa Claus Rally in Sight
The crypto market is also entering a period historically associated with year-end gains, often referred to as the “Santa Claus Rally.” Many investors anticipate this trend will persist, particularly following the recent Bitcoin halving earlier in 2024.
With positive macro cues, potential rate cuts, and easing trade tensions, traders are eyeing a continuation of bullish momentum into the close of the year. Projections suggest Bitcoin could rise another 15%–25% from current levels, potentially testing the $130,000–$150,000 range by the end of 2025.
While volatility is expected to remain, optimism is returning to the digital asset space — signaling that the next leg of Bitcoin’s rally may already be underway.