A sharp rise in Bitcoin was fueled by forced short covering on Binance, not spot demand, raising pullback risks, CryptoQuant data shows.
Bitcoin’s recent rally was primarily driven by a short squeeze on Binance futures, with liquidations forcing traders to cover positions. The exchange’s Short Squeeze indicator hit 6.94, its highest level since November 2024.
The move lacked strong spot buying, leaving the rally vulnerable if momentum fades. Analysts noted that sustained upward pressure would require broader market demand beyond forced liquidations.
No immediate market reaction was specified, but the warning suggests potential volatility if spot inflows do not materialize.