Bitcoin’s $117K Threshold: A Catalyst for a Short Squeeze and a New Bull Run?

Bitcoin is at a pivotal inflection point. The $117,000 level—a psychological and technical milestone—has emerged as a battleground for bulls and bears. With over $3 billion in short positions at risk of liquidation above this threshold [1], the market is primed for a self-reinforcing upward spiral if Bitcoin breaks through. This dynamic, combined with macroeconomic catalysts and institutional inflows, could ignite a new bull run. But the path isn’t without risks.

The Mechanics of a Short Squeeze

Short interest in Bitcoin has surged as traders bet on a September correction, historically a weak period for the asset [2]. However, derivatives data reveals a critical vulnerability: if Bitcoin pushes above $117,000, forced buybacks by short sellers could create a snowball effect. This isn’t just theoretical—historical patterns show that liquidation events often accelerate price momentum [5]. For context, a single day of $332.7 million in spot Bitcoin ETF inflows [3] underscores institutional confidence, suggesting capital is already positioning for a breakout.

The $117,000 level also acts as a psychological barrier. Breakouts here tend to attract broader market participation, including altcoin liquidity [5]. Technical indicators like the 4-hour 200-period moving average and the $113,000 resistance level will be critical in determining whether this becomes a catalyst or a false flag [3].

Macro Catalysts and Market Sentiment

September’s volatility is often exacerbated by institutional portfolio rebalancing and tax-loss harvesting [2]. Yet, Bitcoin’s recent performance—trading near $108,253 as of September 4 [2]—suggests a floor forming around the 200-day moving average ($104,000) and the $100,000 psychological level. These zones have historically drawn strong buying interest, acting as a buffer against deeper corrections [2].

The Federal Reserve’s September 17 rate decision looms large. A 25-basis-point cut, priced in at 85–90% [4], could ease dollar liquidity and reduce borrowing costs for leveraged longs. Meanwhile, U.S. nonfarm payrolls (September 5) and CPI (September 11) will shape expectations for the Fed’s trajectory. If inflation data softens, Bitcoin could see a tailwind as investors rotate into risk-on assets [4].

Risks and Counterarguments

Critics argue that September’s structural selling pressure—exemplified by $751 million in August ETF outflows [2]—could derail a bullish breakout. A breakdown below $108,000 would test the $102,000 support zone, potentially reigniting bearish sentiment [4]. However, historical parallels to 2017 suggest Bitcoin may follow a “V-shaped” recovery after a weak August, rebounding to new highs [2].

Conclusion: A High-Stakes Game of Chess

Bitcoin’s $117K threshold is more than a number—it’s a fulcrum. A breakout here could trigger a short squeeze, amplify ETF-driven buying, and align with favorable macroeconomic signals. However, September’s historical volatility and institutional caution mean this is a high-stakes game. Traders must monitor the Fed’s policy moves, short liquidation dynamics, and institutional positioning. For those with a long-term bullish thesis, this could be the setup to capitalize on a potential new bull cycle.

Source:
[1] Best Crypto To Buy Now: $117k Bitcoin Price Prediction [https://cryptodnes.bg/en/best-crypto-to-buy-now-117k-bitcoin-price-prediction-with-3b-in-shorts-at-risk/]
[2] How Low Can Bitcoin Go in September 2025? BTC Price Predictions and Analysis [https://www.financemagnates.com/trending/how-low-can-bitcoin-go-in-september-2025-btc-price-predictions-analysis/]
[3] BTC price stuck despite Fed cut bets; altcoins M, IP, PUMP show some strength [https://cryptorank.io/news/feed/f7588-btc-price-stuck-despite-fed-cut-bets-altcoins-m-ip-pump-show-some-strength]
[4] From Powell to WLFI: Crypto Calendar September 2025 - Catalysts to Watch [https://medium.com/@XT_com/from-powell-to-wlfi-crypto-calendar-september-2025-catalysts-to-watch-91a499e66e7e]
[5] Bitcoin Breaks $117K—Momentum Builds Toward $120K [https://bravenewcoin.com/insights/bitcoin-btc-price-today-bitcoin-breaks-117k-momentum-builds-toward-120k]