After a stunning rally driven by a textbook short squeeze, Bitcoin (BTC) now stands at a critical juncture — teetering on the edge of a major resistance zone that could either propel it to new highs or send it reeling back down.
The cryptocurrency rebounded sharply from oversold conditions, trapping overconfident short sellers in a cascading liquidation event. While such rallies can be eye-catching, they’re often short-lived unless supported by real spot demand and volume. So, is this the beginning of a new bull leg or a deceptive bull trap?
The Technical Landscape: A Confluence of Obstacles
Bitcoin is currently challenging multiple technical layers of resistance, including:
- The $98,300 price level, which has historically served as a pivot.
- The 0.618 Fibonacci retracement from the previous swing high — a level closely watched by technical traders.
- The descending trendline marking the broader downtrend since BTC’s last peak.
- The point of control on the volume profile — essentially the price area with the highest traded volume recently.
Each of these individually can act as a barrier; together, they create a “confluence zone” — a hotbed of potential reversal.
This setup aligns with what traders call a “decision point” — a place where the bulls must prove their strength, or risk a decisive rejection.
Short Squeeze or Sustainable Rally?
The move up was not driven by healthy market demand, but by liquidations of heavily shorted positions. In such rallies, price is often pulled up like a rubber band — fast and high — but also prone to snapping back if buy-side volume doesn’t follow through.
The market also remains in thin liquidity conditions, with relatively low spot buying interest. This is a red flag for sustainability. Without institutional accumulation or retail momentum, these kinds of moves can quickly unwind.
Two Scenarios to Watch
1. Breakout and Hold Above $98,300:
If BTC can consolidate and close above the $98,300 level with rising volume, it would flip the resistance into support — a strong technical signal. This could ignite further upside, potentially targeting the $104K–$107K range.
2. Rejection and Reversal:
A clean rejection at this level — especially if it’s accompanied by a spike in volume and long liquidations — would suggest the rally was just a short squeeze top. That opens the door for a retest of lower supports, likely in the $92,000–$94,000 range.
Smart Money’s Stance
Professional traders — aka “smart money” — typically fade these rallies unless volume confirms legitimacy. So far, there’s little to suggest real commitment from long-term holders or institutions. If a breakout happens, watch for follow-through buys and volume on-chain — otherwise, expect a pullback.
What Traders Should Do Now
- Watch the $98,300 level closely.
- Avoid over-leveraging — volatility is high, and traps are common.
- Wait for confirmation before assuming trend continuation or reversal.
- Monitor volume, open interest, and funding rates for further clues.
Bitcoin is at a crossroads — the next few candles could define whether this short squeeze was the start of something bigger or just another flash in the pan.
