What is behind Bitcoin’s latest rally
At the beginning of the week, Bitcoin rose to $87,000, and on Monday evening it reached its highest level since January 2026. In just three days, the Bitcoin price increased by around $10,000, significantly improving sentiment among crypto market participants.
On September 22, the crypto market Fear & Greed Index* entered the "extreme greed" zone for the first time since July 2025, rising to 78 points out of 100.
* Fear & Greed Index — an indicator that reflects the prevailing sentiment among market participants. It helps assess whether the market is currently dominated by fear, caution, or, conversely, heightened optimism and a willingness to buy actively. The index is usually calculated on a scale from 0 to 100: low values correspond to fear, while high values indicate greed.
At the same time, analysts remain cautious about Bitcoin's prospects for further growth. They attribute the current Bitcoin surge to several factors at once — the liquidation of short positions, inflows into exchange-traded funds, and technical signals. Meanwhile, the macroeconomic environment remains mixed.
Short squeeze accelerates the crypto market
Investment analysts note that Bitcoin tested a strong resistance level near $88,000.
In their view, Bitcoin's latest upward impulse was largely driven by a short squeeze — the mass forced closure of short positions*.
* Short position (short) — a trading position opened in anticipation of a decline in an asset's price. A trader sells the asset, expecting to buy it back later at a lower price and profit from the difference. If the asset's price rises instead of falling, the loss increases, and during a sharp upward move, the position may be forcibly closed by the exchange.
A short squeeze occurs when rising prices force traders who bet on an asset's decline to close their positions by buying back the same asset. These forced purchases create additional demand and can accelerate the upward price movement.
When opening a short position, a trader effectively borrows an asset from an exchange and sells it, expecting to buy it back later at a lower price and profit from the difference. However, if the asset's price begins to rise, the market participant has to buy it back at a higher price in order to close the position and avoid liquidation.
As a result, an upward move can trigger a chain reaction: the closure of some short positions pushes prices even higher and leads to the liquidation of other traders who were also betting on a decline.
According to CoinGlass, crypto exchanges liquidated around $1.1 billion worth of traders' positions on September 21 alone. Approximately $925 million of that amount came from positions held by market participants betting on falling cryptocurrency prices.
Analysts believe that this wave of liquidations helped the market get rid of excessive leverage*. They note that previous periods of cryptocurrency growth were also frequently accompanied by overheating in the derivatives* market.
* Leverage — a mechanism that allows a trader to open a position whose value exceeds the amount of their own capital. For example, 10x leverage allows a trader to control a position ten times larger than the capital they contributed. At the same time, both potential profits and the risk of losses increase.
* Derivatives — financial instruments whose value depends on the price of another asset, such as Bitcoin. Derivatives include futures, options, and perpetual contracts. They allow traders to speculate on rising or falling prices, use leverage, and hedge risks without necessarily owning the underlying asset itself.
However, a short squeeze alone cannot sustain growth indefinitely. Once the forced closure of short positions comes to an end, the market needs new genuine demand.
Investors return to Bitcoin ETFs
Spot Bitcoin ETFs provided additional support to the market. On Monday, they attracted nearly $1 billion.
ETFs* have made it easier for traditional investors to access the cryptocurrency market. Holders of these instruments do not need to buy and store Bitcoin themselves or interact directly with crypto exchanges — the relevant operations are handled by the fund issuers.
* ETF (Exchange-Traded Fund) — an investment fund whose units or shares are traded on an exchange and can be freely bought and sold throughout the trading day. Such a fund typically builds a portfolio consisting of a specific group of assets — for example, stocks, bonds, commodities, or other financial instruments — and aims to track the performance of a selected index, market sector, asset group, or investment strategy. ETFs allow investors to gain exposure to an entire set of assets through a single exchange-traded instrument, simplifying diversification and portfolio management.
However, this mechanism works both ways. The ease of investing through ETFs facilitates not only capital inflows but also capital outflows: investors can reduce their positions just as quickly when market sentiment changes.
Therefore, sustainable growth depends not on isolated days with large ETF inflows, but on a stable flow of capital over a longer period.
Bitcoin rises despite the macroeconomic backdrop
From the perspective of the global economy, conditions for Bitcoin and cryptocurrencies as a whole can hardly be described as favorable at the moment.
This is primarily reflected in high oil prices, which are increasing inflationary pressure in the United States. At the same time, the U.S. Federal Reserve maintains a restrictive, or hawkish, tone and continues to pursue a tighter monetary policy.
The cryptocurrency market has so far largely ignored the expected interest rate increase at the end of 2026 and the possible postponement of monetary policy easing until 2027.
Experts believe that, from a macroeconomic perspective, one of the few factors currently capable of supporting Bitcoin is growing investor distrust toward U.S. government debt and traditional fiat currencies.
Overall, the current economic environment is more likely to constrain cryptocurrency growth than support it, meaning Bitcoin's upward movement is occurring despite the macroeconomic backdrop rather than because of it.
Technical analysis points to a reversal
At the same time, technical analysis paints a more positive picture for Bitcoin.
Bitcoin managed to break above its 200-day moving average* — the 200-DMA — and consolidate above it. Such a signal may indicate a change in the previous trend.
* Moving Average (MA) — a technical indicator that shows the average price of an asset over a selected period and smooths out short-term fluctuations. These lines are used to assess the overall direction of a trend and identify potential support or resistance levels.
Last week, Bitcoin closed above its 50-week moving average — the 50-SMA.
Historically, this level has repeatedly acted as a kind of boundary between a bear market* and the beginning of a new long-term upward trend.
* Bear market — an extended period during which asset prices generally decline and market participants are dominated by caution and negative expectations. A bear market is typically accompanied by weaker demand, reduced trading activity, and attempts by investors to lower their risks. The opposite market condition is known as a bull market.
In previous market cycles, Bitcoin's return above the 50-week moving average often occurred after a key price bottom had already formed and was accompanied by a gradual recovery in long-term demand.
In classical technical analysis, such moving averages are used to assess the market's long-term direction.
Galaxy Research analysts believe that Bitcoin's rise above these SMA levels may indicate that the bottom of the current cycle is already behind us.
Is Bitcoin's bottom already behind us?
Grayscale analysts previously suggested that Bitcoin's local bottom may have been around $58,000, a level the cryptocurrency reached in July.
VanEck analysts reached a similar conclusion on August 19. It was on that day that Bitcoin began a sharp rally from levels around $65,000, near which its price had remained for several months.
Several positive factors are now affecting the market at the same time: demand in the spot market* is recovering, excessive leverage is declining, institutional investors are returning to ETFs, and global liquidity conditions could potentially improve.
* Spot market — a market in which an asset is bought or sold at the current market price with actual ownership of the asset being transferred. For example, when purchasing Bitcoin on the spot market, an investor receives BTC in their exchange account or wallet. This distinguishes spot trading from derivatives, where participants can trade changes in an asset's price without purchasing the asset itself.
This combination creates the most favorable environment for the cryptocurrency market in recent months.
If these trends continue, the likelihood that the July lows were indeed the cyclical bottom will also increase.
At the same time, strong growth by itself does not guarantee that the rally will continue. The market now needs to demonstrate its ability to hold the price levels it has reached.
Three scenarios for Bitcoin
Over the coming weeks, experts identify three possible scenarios. At the same time, analysts emphasize that the price levels mentioned should be treated as reference points rather than precise forecasts.
- The positive scenario assumes continued capital inflows and Bitcoin holding its price after the current rally. In this case, conditions may emerge for Bitcoin to move toward $90,000.
- The neutral scenario assumes a pause after the sharp rise. Buyers may reduce their activity, while some investors may begin taking profits. Bitcoin could then trade within a broad price range for some time.
- A negative scenario may unfold if external conditions deteriorate and funds begin flowing out of cryptocurrency investment products. In such a case, the Bitcoin price could once again fall below $80,000.
Go Invest believes that if current conditions persist, Bitcoin could undergo a short-term correction into the $70,000–$75,000 range.
Over the medium term, further price dynamics will largely depend on the degree of restrictiveness in U.S. Federal Reserve policy and changes in interest rates.
For now, the market is largely ignoring the prospect of future rate increases, treating high inflation more as a temporary factor.
However, if oil prices remain elevated, the Federal Reserve may be forced to tighten monetary policy further. Such a scenario could put pressure on Bitcoin's price.
On the other hand, Bitcoin's rise could continue if new powerful growth drivers emerge.
Potential factors include cooling investor interest in companies from the semiconductor and artificial intelligence sectors, a shift by the U.S. Federal Reserve toward more moderate rhetoric, as well as a further increase in distrust toward U.S. government debt and fiat currencies.
If such a scenario materializes and the upward trend continues, Bitcoin's next significant resistance level could be around $100,000.