Bitcoin News Today: Bitcoin Surges on Short Liquidations, But Volatility Stalls Rally Momentum

Bitcoin is navigating a critical phase in the final weeks of 2025, with market dynamics pointing to a potential Christmas rally amid a backdrop of short liquidations and mechanical buy pressure. Analysts highlight that persistent short liquidations are reinforcing a buyer-dominant trend, while the derivatives market shows signs of short squeezes nudging prices higher. This has led to a bullish neutrality in sentiment, with investors expecting returns but remaining cautious.

The last week has seen intense volatility, including a sharp two-hour price swing on December 17. During this period, Bitcoin surged $3,300 in 30 minutes, liquidating roughly $106M in short positions, only to reverse quickly and lose nearly all gains in the following 45 minutes. This rapid reversal triggered $52M in long liquidations, showing a volatile short squeeze followed by a long squeeze.

Traders and analysts have attributed these moves to patterns often seen around 10:00 a.m. EST, aligning with the opening of US stock markets. The speed and scale of the swings reflect aggressive trading behavior and heightened market sentiment, with platforms like ZeroHedge and Bull Theory tracking these shifts. Despite the volatility, the overall sentiment remains cautious, with market participants watching for signs of stabilization.

How Markets Reacted

The latest volatility hit traders hard, with over 120,000 positions liquidated in the past 24 hours. Losses approached $400M, with more than $340M in liquidations occurring in the last 12 hours alone. This level of activity highlights the fragility of market positions and the potential for rapid reversals in sentiment.

Bitcoin's price action over the past four hours saw $108M in liquidations, with $75M from short positions and $32M from longs. Ethereum experienced a similar but distinct pattern, where most losses came from long positions, signaling a clearer long-squeeze in the market.

What Analysts Are Watching

CryptoQuant analyst Axel notes that Bitcoin is entering a Christmas market window, with market sentiment indicating bullish neutrality. Persistent short liquidations are creating mechanical buy pressure that nudges prices upward, even as liquidity remains orderly. The derivatives landscape shows strong short liquidations as a key driver, with this activity reinforcing the buyer-dominant dynamic.

However, not all analysts share the bullish outlook. Wyckoff Analytics highlighted weakening momentum and low volume, warning of a potential retest of support levels. Dr. Cat, a crypto analyst on X, suggested Bitcoin is likely to trade sideways into early 2026, with key support levels around $80,000 and $77,000. Lark Davis, another analyst, cautioned that Bitcoin's weekly RSI has fallen to levels seen during major downturns, indicating the risk of further downside.

Risks to the Outlook

Analysts point to several risks that could temper the market's upward momentum. USDT transaction volume on the TRON and Ethereum blockchains has dropped sharply, from $13B and $35B in November to $1.7B and $3.7B, respectively, indicating fading liquidity. This decline in liquidity could limit Bitcoin's ability to sustain price gains in the coming days.

Additionally, the broader macroeconomic environment remains a concern. Bybit and Block Scholes reported no signs of a year-end Santa Rally, with derivatives markets signaling bearish sentiment. Bitcoin and Ethereum continue to trade below their 2025 highs, with recovery attempts short-lived. The report noted subdued participation in perpetuals and elevated volatility in altcoin markets, further indicating cautious investor behavior.

What This Means for Investors

Investors are left to navigate a market in flux, with no clear consensus emerging. The near-neutral long/short ratios on top exchanges like Binance, Bybit, and OKX highlight the uncertainty, with slight bearish leanings on Binance and Bybit and perfect balance on OKX. These readings suggest a market waiting for a catalyst, with traders closely watching for any signs of a breakout.

For now, Bitcoin remains in a consolidation phase, with traders adopting a wait-and-see approach. The Christmas market window could provide a tailwind, but analysts urge caution given the risks of further liquidations and potential macroeconomic shifts. Investors are advised to monitor shifts in liquidity, sentiment indicators, and key support and resistance levels as the year draws to a close.