The crypto market saw a surge of optimism this morning, driving Bitcoin and top altcoins to critical levels. This sudden rise stems from a convergence of factors: a key political signal, short sellers getting squeezed, and anticipation building up ahead of crucial macroeconomic data release.
The primary catalyst for this rally is undoubtedly the presidential pardon granted by Donald Trump to Changpeng “CZ” Zhao, the founder of Binance. This decision has been perceived by the entire market as an unequivocal gesture of support from the American administration toward the crypto industry. By wiping the slate clean for one of the sector’s most influential figures. Trump has sent a clear message: the era of regulatory hostility could be coming to an end.
This signal has rekindled investor confidence, who see it as the promise of an environment more favorable to innovation and adoption. Tokens linked to the Trump ecosystem, such as WLFI, have exploded in value. But the positive shockwave has spread throughout the entire market.
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On the technical front, the surge was violently amplified by a “short squeeze” phenomenon. Many traders had bet on a market decline, placing short sell orders. When the price of Bitcoin began to climb, these positions became losing ones. The rise accelerated as key levels were breached, culminating in a wave of massive liquidations of short positions up to the $112,200 zone.
Each liquidation is a forced purchase, creating a positive feedback loop: the rise forces sellers to buy, which fuels the rise even more. This purge of “shorts” has cleaned up the market and allowed the price to soar without the selling pressure that was holding it back.
As Killa indicates, more than half of the top traders are “net short”. Which shows that the majority are betting on a decline right now.
However, this morning’s euphoria should be tempered. The market is holding its breath in anticipation of today’s inflation (CPI) data release. These figures are a key indicator for Federal Reserve monetary policy. Higher-than-expected figures could shatter hopes for an interest rate cut, which would be negative for risk assets like crypto.
Traders are therefore on high alert. The current rally could just be a speculative movement in anticipation of good news, but the risk of a violent backlash is very real. Volatility is expected to peak at the time of the announcement, and the direction the market takes for the rest of the week will depend entirely on this crucial figure.
Moreover, the majority of short-term liquidations are now situated below $107,000. This increases the probability of a reversal and a sell-the-news event.
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Charles Ledoux is a Bitcoin and blockchain technology specialist. A graduate of the Crypto Academy, he has been a Bitcoin miner for over a year. He has written numerous masterclasses to educate newcomers to the industry and has authored over 2,000 articles on cryptocurrency. Now, he aims to share his passion for crypto through his articles for InvestX.
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