Bitcoin shot to $83,000 this week before pulling back, and is now trying to hold above $80,800. Market maker Wintermute says the move wasn't driven by real demand — it was a short squeeze. Open interest jumped $10 billion, yet spot volumes fell to their lowest in two years. That combination has traders asking how far the rally can run.
Why Wintermute is wary
The firm warned the surge lacks organic support. Funding rates are still tilted short, meaning there's fuel for another squeeze. But Wintermute cautioned that chasing the move now looks unattractive — Bitcoin's RSI is in overbought territory, and the price spike came on thin liquidity. “Equities are driving crypto right now,” Wintermute noted, adding that a hot CPI print or uncertainty around the Warsh transition could stall everything.
ETF inflows and shrinking supply
While the squeeze dominates the narrative, there are structural tailwinds. Bitcoin ETF flows added $623 million this week, and Morgan Stanley’s Bitcoin ETF pulled in $194 million in its first month with zero outflows. Meanwhile, exchange reserves are at seven-year lows, a sign that accumulation is ongoing. That supply crunch could support prices even if the short-squeeze fades.
What could break the momentum
For now, Bitcoin is up 14% over the past month. But the rally is fragile. Wintermute pointed to macro risks: a hotter-than-expected CPI print would rattle equities, and with crypto following stocks, that would spill over. Also unresolved is the Warsh transition — any policy uncertainty there could tighten financial conditions. The next few CPI releases and Fed commentary will be the real test.
The short squeeze lit a fire, but without spot buyers stepping in, the rally could run out of steam fast.
