Bitcoin is experiencing momentum largely driven by leverage, which has emerged as a significant factor in its recent performance. The latest price breakout initiated a considerable short squeeze, compelling traders to close out their bearish positions en masse. According to data from Glassnode, this event marked the largest short liquidation across the top 500 cryptocurrencies since October 10, 2025. Observations from market charts indicate that spikes in liquidations closely align with Bitcoin”s ascent to recent local highs.
During this rapid movement, traders faced millions in wiped-out short positions, with forced buybacks intensifying upward price pressure. This trend has been developing since late 2025 and has notably intensified as Bitcoin maintained elevated price levels instead of correcting. Should the current liquidation trends continue, Bitcoin could approach the $100,000 to $105,000 range purely on the momentum created by these activities. However, should the funding rates decrease and open interest reset, a price consolidation may occur.
Historically, the sustainability of these price movements has relied on spot demand to replace leverage. Recently, there has been a noticeable slowdown in distribution from long-term holders, often referred to as OGs. Data from STXO, which tracks coins that have been inactive for over five years, shows a significant decrease in spending among long-term holders. Further analysis from CryptoQuant indicates that while OGs were active into 2024, leveraging institutional demand and government purchases as exit opportunities, their behavior has shifted considerably.
At the outset of this cycle, OG transactions peaked at approximately 3,800 BTC, subsequently declining to 3,200 BTC, and then to just 2,200 BTC. This reduction in selling activity from OGs diminishes overhead supply, thereby bolstering price stability. In the long run, such a trend signifies confidence among these holders, as historically, OG restraint is more indicative of accumulation phases rather than late-cycle distribution.
The dynamics among whales also warrant attention. Charts reveal a pattern where whales first unwind long positions before shifting into shorts, indicating a strategic pivot. Despite this shift, Bitcoin”s price remains elevated, even as momentum appears to be waning. Concurrently, leverage is witnessing a subtle resurgence. This combination of factors shifts the risk profile toward the downside.
Whales tend to react early, often perceiving crowded positions and late-cycle behaviors. Meanwhile, retail traders, typically chasing momentum, often take positions contrary to market structure. As volatility escalates, retail participants are more likely to increase their long positions. On-chain data from Alphractal illustrates that as Bitcoin approached $69,000, whales were closing their long positions and shifting toward shorts, while retail traders were adding leveraged longs. This behavior preceded a nearly 20% correction, with Bitcoin dropping from $69,000 to $56,000 before stabilizing.
This current setup suggests the potential for a market shakeout or cooling phase. If leverage continues to unwind, a price retracement is probable before any sustainable upward momentum can materialize. In summary, the current structure of Bitcoin indicates that leverage is the primary force behind its momentum. The recent short liquidations have driven prices higher, while the slowdown in OG selling and the defensive positioning of whales tighten supply but also increase fragility. For Bitcoin to achieve sustainable gains, it will require a shift in demand dynamics away from leverage. Until such a transition occurs, the risks of volatility remain elevated, leaving future price extensions vulnerable to corrective resets.
