Analysis: Bitcoin's recent rally is driven by spot demand, with rising potential for a short squeeze

Odaily News According to on-chain and derivatives data, the rise in Bitcoin's price is primarily driven by spot demand, while the risk of a short squeeze is increasing. Bitcoin has gained approximately 10% year-to-date, with its price holding below $97,000. This rally is mainly fueled by spot purchases rather than leveraged positions established through futures. Spot-driven rallies are generally considered healthier than those driven by leverage. The recent price movement from $90,000 to $97,000 has shifted from being dominated by leverage to being supported by spot buying over the past week. Furthermore, Glassnode data shows that Bitcoin-denominated futures open interest stands at 678,000 BTC, comparable to the 679,000 BTC recorded on January 8th, indicating that overall leverage in the system has remained largely unchanged. The perpetual futures funding rate is currently negative. (CoinDesk)