Bitcoin Tops $80,000 as Short Squeeze Drives Rally, Wintermute Says

Bitcoin climbed above $80,000 and broke through a key technical resistance level, but the move appears to have been driven more by a derivatives-led short squeeze than by spot buying, according to Wintermute.

In a market report released on May 12, the crypto trading firm said Bitcoin rose to about $83,000 and moved above its 200-day moving average. Even so, it said the structure of the rally remains far from a healthy, spot-led advance.

Open interest rose by about $10 billion over the past month, increasing to $58 billion from $48 billion, Wintermute said.

Spot trading volume, by contrast, has fallen to its lowest level in the past two years.

That suggests forced buying tied to short liquidations has been the main driver of Bitcoin's advance.

As Bitcoin moved above $70,000, the market did not trust the rally and short positions continued to build, the firm said. Once liquidations began, short-covering purchases accelerated the price gains.

Funding rates still show a short bias, leaving room for another short squeeze. But short covering is different from conviction-driven buying.

Wintermute took a more positive view of the longer-term outlook.

The firm said spot Bitcoin ETFs have recently drawn combined inflows of $623 million. Morgan Stanley's Bitcoin ETF, in particular, attracted $194 million in its first month without a single day of net outflows.

Bitcoin holdings on exchanges also remain at their lowest level in seven years, according to Wintermute.

In the near term, however, a recovery in spot demand remains a key variable.

If spot buying does not follow once the short squeeze runs its course, prices could quickly come under pressure again, the firm said. The relative strength index, or RSI, is also entering overbought territory.

Bitcoin could still rise to $85,000, it added, but the risk-reward for chasing the move at current levels is not especially attractive.

In the altcoin market, Wintermute said performance is becoming more theme-driven rather than broad-based across the sector.

In real-world asset tokenization, Centrifuge is attracting institutional interest, the firm said. Tokens tied to AI computing are also gaining strength on rising platform usage and expectations for deflationary token structures.

Separately, Wintermute said this week's U.S. consumer price index report and the nomination process for Kevin Warsh as Federal Reserve chair could be key drivers of market volatility.