Traders Surprised as Bitcoin Soars to $106K Before Retreating to $103K

Since late Sunday, liquidations amounting to over $600 million in cryptocurrency derivatives have occurred, as Bitcoin (BTC) surged past $106,000 before quickly retracting to around $103,000, surprising both optimistic and pessimistic traders.

The price movement commenced around 21:00 UTC on Sunday, witnessing Bitcoin increase by over $2,500 within a short time frame. This surge is likely due to lower liquidity during the weekend and possible algorithm-driven purchases triggered by reaching certain technical benchmarks.

This kind of market behavior exemplifies a classic short squeeze, followed by swift profit-taking or a stop-run. A short squeeze occurs when traders positioned against a rising price (short sellers) must buy the asset to mitigate losses, inadvertently driving the price upward quickly.

This sudden shift resulted in more than $460 million in long positions and $220 million in short positions being liquidated across futures involving major cryptocurrencies like Ether (ETH), Solana (SOL), and Dogecoin (DOGE).

The liquidation event was particularly striking because it happened during typically quiet weekend hours, indicating unusual trading activity or the actions of a substantial market player.

Data indicates that prices for SOL, DOGE, and XRP have fallen by more than 4% within the last 24 hours, with the overall CoinDesk index (CD20) down over 2%.

This fluctuation comes on the heels of a week marked by macroeconomic instability, highlighted by Moody’s downgrading the U.S. credit rating on Friday and the reemergence of inflation concerns following mixed economic indicators. The downgrade also caused U.S. 30-year treasury yields to exceed the 5% threshold.

Even though the cryptocurrency market has recently seen renewed institutional interest and momentum with spot ETFs, traders are exercising caution at the current price points, as noted.

Though Bitcoin has remained stable over the past week, it has struggled to maintain levels above $106,000 — a significant psychological and technical barrier — suggesting potential resistance in the near term, according to FxPro’s Alex Kuptsikevich.

Some traders are bracing for increased volatility in the upcoming days, which could serve as a cautionary signal for those contemplating leveraged positions.

“Investors are reallocating assets to Bitcoin amid increasing worries regarding a proposed U.S. spending bill that could result in trillions in new debt and elevate Treasury premiums,” stated Haiyang Ru, co-CEO of HashKey Business Group, in a Telegram message.

“Although Bitcoin is hovering just beneath recent highs, we expect more fluctuations in the market as traders gear up for new trading arrangements and the finalization of fiscal policies,” Ru added.

Read more: US 30-Year Treasury Yield Breaches 5% Amid Moody’s Rating Downgrade, Fiscal Concerns