Bitcoin Surges Past $81,000, Fueled by Massive Short Squeeze

Bitcoin surged past the $81,000 mark on Saturday, Sept. 18, driven by a significant short squeeze that liquidated nearly $200 million in leveraged positions. The rally marks a sharp reversal from earlier in the week, when the cryptocurrency faced pressure from global interest rate hikes and legislative setbacks in the United States.

Squeeze and Spot Demand Drive Prices

The price of Bitcoin climbed as high as $81,702 after trading near $76,400 just a day earlier, according to market data. The move was accelerated by a rapid cascade of liquidations targeting bearish bets.

Key drivers for the rally include:

• Short Squeeze: Approximately $192 million in leveraged crypto positions were liquidated within a single hour, with over $183 million of that total consisting of short positions. Bitcoin shorts alone accounted for about $119 million.
• ETF Inflows: U.S. spot Bitcoin ETFs provided a base of support, recording roughly $159 million in net inflows on Sept. 17, signaling fresh institutional and retail demand.

Resisting Macro and Regulatory Headwinds

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The rally occurred despite a challenging environment for risk assets. The U.S. Federal Reserve raised interest rates by 25 basis points, and the Bank of Japan followed with its own quarter-point increase, lifting its policy rate to a 31-year high. While Bitcoin initially dipped toward $76,000 following the BOJ's decision, a wider sell-off did not occur.

In Washington, regulatory uncertainty continued after the U.S. Senate failed to advance the CLARITY Act, a key piece of crypto legislation. However, the SEC did introduce a five-year "innovation exemption" to allow certain platforms to trade tokenized stocks, while the CFTC issued separate relief for some software providers in the derivatives market.

Broader Market Rallies

The positive momentum extended across the digital asset market, with major altcoins posting significant gains. Ether, the second-largest cryptocurrency, rose over 6% to trade at $2,619.81. Other notable performers included Solana, which jumped more than 10% to $113.57, and XRP, which gained nearly 9% to $1.4238.

Market sentiment appears cautiously optimistic following the rebound. Data from the Polymarket platform indicated traders see a 59% probability of Bitcoin reaching $90,000 by the end of the year, but only a 25% chance of it hitting the $100,000 milestone.