BTC breaks $87,000: bear squeeze or spot takeover?

According to Woofun AI, Bitcoin (BTC) experienced a rare round of vertical pull-up from September 21 to 22. The price quickly broke through the $82,000 range and once reached a high of $87,000, rising more than 7% in 24 hours.

This trend is not driven by a single favorable trend; it is the result of the restoration of macro-expectations, the bearish squeeze on derivatives, and the return of spot capital. The focus of the market's attention has shifted from simply 'breaking through resistance' to deeper structural issues: after buying is exhausted due to forced liquidation, is there enough active buying to handle subsequent increases? The essence of this round of market conditions is a bullish offensive fueled by differences in expectations, accelerated by the leverage mechanism, and finally verified by an improvement in the spot position structure.

The initial dynamic energy of the market was fixed to the difference in expectations at the macro level. The Federal Reserve previously announced an interest rate hike of 25 basis points, but subsequent policy signals were not as hawkish as the market had previously feared. This “actual policy is more dovish than pricing” expectations quickly fixed risk appetite. CryptoTicker notes that this macro-shift directly contributed to the rebound in crypto assets. At that time, more than $445 million of crypto bears had already been liquidated, with Bitcoin bears accounting for more than $230 million.

It is worth noting that the market has never traded the interest rate hike itself, but rather the relative strength or weakness of the policy path. As investors prepare mentally for a more aggressive path of austerity, the implementation of moderate policies has instead become a catalyst for the recovery of risky assets. As a result, Bitcoin regained its position above $80,000, but this only explains the resumption of buying, but it cannot explain the “stall” phenomenon where the price continued to cross $82,000, 84,000, or even $87,000 over the next few hours. What really caused the market to evolve from a moderate rebound to a violent rise was the already ambush short liquidation chain in the derivatives market.

Before macro capital entered the market, the derivatives market had already laid the groundwork for this round of gains. Derivatives analysis on September 18 showed that while BTC was still fluctuating around $78,300, the $84,000-$85,000 range was marked as a dense short clearing band, while $82,300 was the key upper end of the 30-day fluctuation range. Once the price breaks above $82,000, the typical short squeeze (short squeeze) mechanism kicks in: the price increase forces bears to approach the clearing line, and the act of being forced to buy and close positions further pushes up the price, which in turn triggers stop-loss orders for more bears. TechI statistics show that when BTC first breached $84,000, about $2.52 billion of short positions were liquidated in a short time.

However, this is only the beginning. As the price continued to rise above $85,000, the size of the liquidation scaled up. Citing CoinGlass data, The Block said that as of September 21, more than US$750 million of positions in the entire market had been liquidated in the past 24 hours, of which up to US$648.3 million were short positions.

This self-reinforcing cycle of “breakthrough - clearing - breaking through again - clearing again” caused the market to evolve from an ordinary technological breakthrough to a vertical rise in a short period of time. According to data compiled by Woofun AI, this stepped bear squeeze was not a one-time event, but was repeated at different resistance levels, causing higher-position bears to immediately become new forced buyers after the $84,000 short capital was laundered, thus maintaining upward momentum.

However, a market that simply relies on bears has a natural flaw: every time a short is liquidated, it consumes a future compulsory buyer. Therefore, the key to judging whether this round of market conditions can continue is whether spot capital will actually follow suit. The current data gives an affirmative answer. US spot Bitcoin ETFs recorded a combined net inflow of approximately $592.5 million on Thursday and Friday, including a single-day inflow of $433 million on September 18. Specifically, Fidelity FBTC (FBTC.US) has inflows of US$310.7 million and BlackRock (BLK.US) IBIT (IBIT.US) has inflows of US$108.4 million, showing strong institutional funding capacity.

The more critical variable is the improvement in the position structure: this round of BTC's rise is once again in the average cost area around $82,000 for US spot Bitcoin ETF investors. This means that ETF holders who were previously in a state of floating losses have returned to the profit range, thereby reducing potential selling pressure. CryptoTicker also pointed out that despite the sharp rise in prices, capital rates are still relatively low, and there are no obvious signs of overheating leverage. This further confirms that this round of the market is not simply driven by the contract market, but is supported by actual spot purchases. Beginning with the $82,000 breakthrough, the market not only cleared the bears, but also repaired confidence in spot capital positions. This is an important reason why BTC did not show significant selling pressure after breaking through $84,000 and was able to continue to expand upward.

In the future market outlook, $84,000 is no longer the core focus; it is only an intermediate point in the Short Squeeze acceleration process. The core question facing the market today is: who will continue to drive the price upward after mandatory buying is over?

If ETF capital continues to maintain a steady net inflow, and funding rates and open positions do not heat up rapidly due to the influx of upward capital, then this round of the market is expected to shift from a “short squeeze” to a trending rise taken over by spot capital. Conversely, if the price continues to rise but ETF purchases weaken, while unclosed contracts and funding rates rise rapidly, it indicates that the driving force has turned back to leverage. The faster the price rises at this point, the more we need to be wary of the pullback risk caused by crowded transactions. Therefore, after BTC has broken through $87,000, the next phase of the market should focus not only on 'whether it can reach $90,000', but on closely watching three key indicators: whether ETF funds continue to enter the market, whether the level of leverage is rapidly heating up, and whether the previously broken $82,000 to $85,000 area can be converted into effective support during a pullback. The market from $82,000 to $87,000 has proven that a bear squeeze can turn a normal breakout into a vertical rise, but from $87,000 and up, what the market needs to prove is whether there are still enough active buying willing to accept when fewer people are forced to buy.