Bitcoin Breaks $117,500 Amid Surge, Exceeds $1B in Short Liquidations

Bitcoin prices surged over 6% Thursday, breaching the $117,500 threshold, driven primarily by liquidation of short positions worth approximately $1 billion according to market data provider CoinGlass.

This sharp price increase occurred amidst a reported drop of over $1.58 billion in overall derivatives open interest, suggesting a significant reduction in outstanding positions rather than pure speculative inflows, analysts noted.

According to cryptocurrency derivatives expert Wenny Cai of SynFutures and founder Georgii Verbitskii of TYMIO, while spot market fundamentals appear weak (CoinGlass data indicates persistent ask-heavy order books since July 8), the recent gains are currently “fragile.” This assessment is supported by subdued funding rates on major exchanges.

The timing coincides with a weakening US dollar, which has fallen nearly 10.8% year-to-date. Historically, a softer dollar has correlated with risk appetite gain and potentially benefited Bitcoin as its dollar-denominated price increases, even if real value remains stable. Some analysts link the dollar’s weakness, often stemming from accommodative US monetary policy, further bolstering Bitcoin’s appeal.

Despite the significant gains, market participants are evaluating whether Thursday’s rally, fueled by short-covering, can be sustained without new capital inflows. Verbitskii observed increased positioning in options, particularly for higher strikes, signaling potential for continued buying pressure, especially if Bitcoin maintains weekly and monthly highs. However, Cai anticipates momentum fading “without a new wave of inflows.”