Bitcoin Under Extreme Momentum: Short Squeeze, Key Resistance, and Market Turning Point Signals

Market Overview: Bullish Momentum Persists, Sideline Capital Struggles to Find an Entry

The crypto market has recently shown a clearly bullish-dominated structure, with prices pushing higher day after day, making it hard for sidelined capital to find an ideal entry. The market as a whole is in a rebound phase, with some assets posting double-digit gains and a few even approaching the triple-digit gain range. Against this backdrop, the core disagreement among market participants is whether to chase the breakout trade now or wait for a pullback before positioning.

Looking at market sentiment, the Fear & Greed Index climbed rapidly from single digits to 74 in a very short time, entering the greed zone. This extremely fast sentiment warming deserves attention, because when the index enters the extreme greed zone, it often means a local top is forming and market sentiment has clearly become overheated.

Short Squeeze: The Main Driver of This Rally

One of the core drivers of this price advance is the continued squeeze on short positions. Data shows that of roughly $647 million in total liquidations, about $457 million came from the short side, with short liquidations significantly exceeding longs. Mechanically, when shorts are liquidated they are forced to buy back, and this buying in turn pushes prices higher, creating a self-reinforcing upward loop.

The long/short ratio has turned back to a positive tilt, but relative to the current strong bullish momentum, this tilt is not particularly notable. It is worth noting that shorting in a market with relative strength is not wise, unless it is as a hedge for a large long position or after waiting for a failed swing pattern to appear; otherwise, the act of shorting itself further fuels the upward price move.

Volume and the Key Threshold: The $5 Billion Dividing Line

Despite the clear price expansion, daily exchange volume still needs to reclaim the key $5 billion level. This threshold is seen as an important gauge of whether incremental capital is returning: once daily volume steadily holds above this level, it means more capital is re-entering exchanges and planning to buy, which could form a momentum-driven move similar to 2020. Before volume effectively breaks through, the sustainability of the price expansion still needs to be watched.

Technical Structure: Strong Momentum but Watch for a Short-Term Pause

Short-Term Momentum and Overbought Signals

From a technical indicator perspective, momentum still leans toward further upside. The Relative Strength Index (RSI) has broken out of its prior falling wedge structure to the upside, a pattern usually seen as a positive signal. However, when RSI enters the 80 to 100 percentile range, the market needs to be more cautious.

At the same time, the TD Sequential printed a 9 sell signal on the day, which usually means prices may enter 1 to 4 days of sideways consolidation or even a pullback. Combined with the extreme magnitude of the rally from the lows, historical backtests show that local tops in such cases tend to appear within a relatively short period.

Key Resistance and Support

From an anchored Volume-Weighted Average Price (VWAP) perspective, price is currently breaking above the VWAP anchored from the all-time high; if it subsequently falls back below it, that can be viewed as a deviation signal. The major resistance zone above sits near $92,000, which corresponds to the midpoint of the range from the all-time high to the current low and is a key level bulls need to overcome; an effective breakout would clearly improve the long-term market structure.

On the downside, the prior pink horizontal line is an important historical support-resistance flip level; if price retests that area and confirms it as support, it would open the door for the next push toward the midpoint level (around $92,000).

Market Structure: High-Low Structure Shows an Initial Shift

On the 5-day chart, price has officially broken below its prior structure of rising lows, forming its first lower low. This change means the market structure is undergoing a real shift, and the next rally has a high probability of forming a lower high. If the subsequent move develops into a structure resembling a head-and-shoulders pattern, that rally would become a buy-the-dip opportunity; once the neckline is broken, it would drive prices further up.

It should be noted that it is not yet sufficient to conclude that $57,000 is the bottom of this cycle. Although this possibility is relatively high, a large bull trap scenario still exists, and the specific path will depend on the evolution of key variables such as the dollar index, 10-year and 30-year Treasury yields, and USDT dominance.

Cross-Market Linkages: Dollar, Treasury Yields, and US Equities

Dollar Index and Treasury Yields

The dollar index is rebounding from a key level; the double-top structure formed earlier had driven it lower, and it is now in a directionless phase, with no confirmation yet of whether a larger decline or a rebound will follow. The confusion in the dollar's path is closely tied to expectations around Federal Reserve policy.

On the Treasury side, the 30-year yield is pushing toward a key level above. A veteran trader criticized the Treasury's use of buyback operations to suppress long-end yields, arguing that artificially holding down yields only delays the problem and cannot change the inevitable outcome of market pricing. From a market-signal perspective, rising long-end yields mean debt costs need to be genuinely priced, and the only way to durably push down long-term yields is to address the fiscal deficit. Rising 10-year and 30-year yields will put some pressure on stocks.

US Stock Index and Individual Stocks

The Dow Jones Industrial Average broke out to the upside after retesting a Fibonacci zone, showing continuation momentum. The S&P 500 rebounded but remains in a lower-high, lower-low pattern on lower timeframes, with no substantive change. The Nasdaq offers a bullish opportunity, and its path may move in tandem with Nvidia.

On Nvidia, price has pulled back into the zone of interest between the Fibonacci range and the 50% retracement level and has begun to react, with rebound potential. In addition, selling pressure on some individual stocks has eased somewhat, but note the potential selling pressure from lockup expirations for employees and early investors, a mechanism similar to token unlocks.

Relative Strength Watchlist

In a broad rally, assets with relative strength tend to extend their strong performance more easily. Current relative strength names worth watching include Zcash, VVV, and Morpho.

• Zcash: After reclaiming the middle of its range, it triggered a move toward the range high and has now completed the breakout, so the entry window has passed.
• Solana: Gains since the low have been significant and it is close to the final take-profit zone; the 50% retracement level can be watched as the key area for the next major pullback.
• VVV: Showing a symmetrical triangle similar to Bitcoin's earlier pattern; if an hourly close confirms a breakout, it could see a larger measured move, which can be watched in terms of risk-reward.
• Morpho: Among altcoins, its drawdown from the all-time high is relatively small, making it a relative strength name. On the daily chart it sits within a multi-month range spanning more than a year; a pullback would typically offer a buy-the-dip opportunity, though lower timeframes are volatile and a clearer entry structure is needed.
• TRX: Also showing relative strength, about 23% below its all-time high if wicks are included, or within about 8% of the all-time high based on existing price action, with the trend still continuing.

Spot Positioning: Wait for a Pullback After Trend Confirmation

For spot buying, larger-scale accumulation should wait until the bear market is confirmed over and the market shifts into a bull market, i.e., when the overall trend forms higher highs and higher lows. The core of this strategy is that although the entry cost may be slightly higher, it buys the insurance of a confirmed trend—trends and momentum tend to have inertia, and buying the next higher low after trend confirmation has a lower probability of drawdown and can move into profit relatively quickly.

By contrast, if you keep buying the dip after an all-time high as price falls from $126,000 all the way to $110,000, $90,000, $85,000, $65,000, and even $60,000, your average cost could still be around $95,000, leaving you underwater for a long time. Therefore, the key to spot positioning is to wait for the formation of the next major higher low.

Risk Disclosure

Current market momentum is strong, but the TD Sequential 9 sell signal, extreme greed sentiment, and the presence of key resistance all mean the probability of short-term sideways action or a pullback has risen. In a strong momentum phase, the risk-reward of chasing longs is not ideal; a more reasonable approach is to manage risk well and wait for structural confirmation. This article is only an objective analysis of market conditions and technical structure and does not constitute any investment advice. Digital asset prices are highly volatile, and investors should assess risks themselves.