Short positions worth $300 million liquidated as Bitcoin rises…Is the Santa Rally starting?

Son Min

Summary

It reported that Bitcoin surpassed $116,000 thanks to easing macroeconomic uncertainty and large-scale short liquidations.
Experts said the year-end Santa Rally is possible, and that short liquidations, reduced on-chain supply, and improved technical indicators are driving the uptrend.
They reported that expectations for additional rate cuts at the Federal Open Market Committee (FOMC) meeting have strengthened the market's positive sentiment.

Bitcoin (BTC) surpassed $116,000 thanks to hopes of easing macroeconomic uncertainty and large-scale short liquidations. Experts said the year-end 'Santa Rally' is likely to recur this year.

On the 27th (local time), according to The Block, Bitcoin rose 3% over 24 hours to trade at $116,000. This is the highest in two weeks. Ethereum (ETH) surged 6% to $4,187, while XRP and Binance Coin (BNB) each rose 2%. Solana gained 5.7% and showed strength.

Along with the price rebound, mass short liquidations occurred. About $160,000,000 of short positions were forcibly liquidated in about 30 minutes, and the total daily liquidation amounted to $347,500,000.

Expectations for a year-end rally are also rising. Rachel Lucas, a BTC Markets analyst, analyzed, "This rise is not a short-term spike but part of a sustained upward trend driven by hopes for macroeconomic improvement, reduced on-chain supply, and improved technical indicators." She added, "Expectations of improved U.S.-China relations have led to more stable global supply chains and a recovery in risk-asset preference," saying, "This will also have a positive impact on crypto assets."

Vincent Liu, chief investment officer (CIO) of Chronos Research, said, "Excessive short positions were forced out by the rally, creating a classic short squeeze (short squeeze)." He continued, "Year-end is a time when increased liquidity, portfolio rebalancing, and positive investor sentiment converge," and forecasted, "As long as expectations for rate cuts and eased U.S.-China trade persist, there will be volatility but the uptrend will remain intact."

Nick Luck, director of LVRG Research, said, "Looking at past cases, the 'Santa Rally' has repeated at year-end," and added, "Considering the cycle after the 2024 halving in particular, it is highly likely that a similar pattern will continue this year."

Meanwhile, expectations for additional rate cuts have also formed ahead of this week's Federal Open Market Committee (FOMC) meeting. According to CME Group's 'FedWatch' tool, the market sees a 0.25%p cut as 96.7% likely.

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