Bitcoin surpassed $106k thanks to a short squeeze and bullish sentiment, but high volatility and resistance at $109k pose correction risks.
Bitcoin has rallied rapidly above $106k in the last 24 hours, reaching one of its highest levels since January 2025. The surge was the result of a short squeeze, when traders betting on a falling price were forced to close their positions, pushing the value of the asset up.
The bullish mood in the options market, supported by the growth of open interest to $67.5 billion and the inflow of $603.74 million into spot #bitcoin-ETFs during the week, strengthened the uptrend, raising the total capitalization of the crypto market by $250 billion.
Institutional demand and improving macroeconomic conditions were key drivers of growth. Expectations of an easing of trade wars, such as the agreement between the US and the UK, increased investor appetite for risk assets, including bitcoin. However, analysts note that the $106-109k zone remains strong resistance where large clusters of #liquidity are concentrated, which could limit further upside without new catalysts.
Despite the optimism, the market remains volatile: after peaking at $107k, the price has corrected to $103k as of May 19, 2025. The downgrade of the U.S. credit rating by Moody's on May 16 added uncertainty, which may trigger a short-term correction to $100k.
Market participants are closely watching the developments, waiting for new signals from regulators and institutional players, which may determine the further dynamics of bitcoin.
