Can Bitcoin Still Reach $100,000 in 2025 Despite Weakening Capital Flows and Conviction Selling?

The question of whether Bitcoin can reclaim its $100,000 milestone in 2025 hinges on a critical but often overlooked dynamic: the potential for a short squeeze to catalyze a bullish reversal. While weakening capital flows and conviction selling have cast a shadow over the market, the interplay of derivatives positioning, on-chain metrics, and historical precedents suggests that a short squeeze remains the most viable path for a sustained upside move.

The Case for a Short Squeeze: Market Positioning and Derivatives Pressure

Bitcoin's current market structure is primed for a short squeeze. Over $5.8 billion in leveraged short positions are clustered around the $95,000 level, creating a liquidity target that could trigger cascading liquidations if the price breaks above this threshold. This concentration of shorts is exacerbated by the $28.5 billion in Bitcoin and Ethereum options set to expire on Deribit, amplifying sensitivity to key price levels.

Technical indicators further reinforce this scenario. Bitcoin's MVRV ratio, a measure of undervaluation relative to realized value, suggests the asset is in accumulation territory-a pattern historically observed before uptrends. Meanwhile, the RSI on daily charts has dipped to 35, deep in oversold territory, and perpetual funding rates have turned negative for the first time in a month, signaling a potential market bottom. Open interest has also declined sharply from its November 21 peak, indicating reduced leverage and a cleaner market structure.

On-chain data adds another layer of conviction. Long-term holders (>5 years) have maintained their positions, while medium-term holders (1-5 years) have reduced balances, suggesting short-term capitulation without long-term panic. The 4% drop in Bitcoin's hash rate in December 2025-the sharpest since April 2024-is a contrarian bullish signal, historically associated with market bottoms.

Historical Precedents: Short Squeezes as Catalysts for Bullish Reversals

Bitcoin's history is punctuated by short squeezes that have driven explosive price moves. In May 2025, for instance, a $1 billion liquidation event pushed Bitcoin above $100,000 for the first time in months, triggered by optimism around a U.S.-UK trade deal. Similarly, the 2021 short squeeze, fueled by institutional adoption and regulatory uncertainty, saw Bitcoin surge past $68,789 before a summer correction.

The 2017 bull run, which propelled Bitcoin from under $1,000 to nearly $20,000, was similarly driven by speculative FOMO and leveraged positions. These events highlight a recurring theme: when short-term bearish sentiment becomes extreme, the market often corrects through a short squeeze, rewarding those who anticipate the reversal.

The Path to $100,000: Risks and Opportunities

While the short squeeze narrative is compelling, risks remain. Derivatives pressure, particularly around the $90,000 level, could prolong the bearish phase if institutional flows fail to stabilize. Additionally, Bitcoin's recent struggles to hold above $90,000 during U.S. trading sessions underscore the fragility of buyer demand.

However, the clustering of short positions near $95,000 creates a self-fulfilling prophecy: a breakout above this level could trigger a cascade of liquidations, redefining the support as resistance and reigniting bullish momentum. This dynamic is further amplified by thin December liquidity, a historical catalyst for holiday rallies.

Conclusion: A Short Squeeze as the Last Viable Path

Bitcoin's ability to reach $100,000 in 2025 may ultimately depend on whether the market can execute a short squeeze before conviction selling exhausts buyer demand. The alignment of derivatives positioning, on-chain metrics, and historical patterns suggests that this scenario is not only plausible but increasingly probable. For investors, the key lies in monitoring the $95,000 level and the broader derivatives landscape for signs of a reversal.

As the calendar turns to December, the stage is set for a dramatic resolution. Whether Bitcoin's bulls succeed will depend on their ability to exploit the fragility of the current short position structure-a test of both market psychology and technical precision.