Bitcoin Surges 10% to $105,000 on Short Liquidations

Bitcoin's price surged to $105,000 on Monday, marking a significant rebound from its recent lows. This price movement was driven by short liquidations rather than new long positions, as indicated by a 10% drop in open interest (OI). The surge in price was accompanied by $130 million in short positions being wiped out on June 23, forcing traders who had bet against Bitcoin to buy back BTC, which contributed to the sharp price increase.

The Coinbase Bitcoin (BTC) Premium Index reached its second-highest value on Monday, reflecting a price premium on BTC available at Coinbase versus other exchanges. This index has remained positive for most of June, indicating sustained buying pressure from US investors. The positive spot ETF flows for most of the month further support this trend, with a study noting a 0.27 coefficient linking prior-day ETF inflows to price increases, suggesting market optimism.

On the other hand, Binance’s retail inflow percentage reached a two-year high, coinciding with a Bitcoin price decline. Onchain metrics indicate a sharp rise in exchange inflows, particularly in the 0 to 1 BTC range. This behavior suggests proactive trading or profit-taking by retail investors, potentially driven by lower entry barriers on Binance. Onchain analyst Maartunn explained that these inflows typically signal an intention to trade rather than to hold, indicating that retail participants may have been ahead of the market curve this time.

Both the Coinbase premium and Binance inflows offer contrasting insights into the current Bitcoin market. The Coinbase premium suggests strong buyer interest, potentially from institutional investors via ETFs, which could cushion the decline. Conversely, high Binance inflows may reflect profit-taking or panic selling by retail investors, contributing to downward pressure. This mixed scenario implies caution for buyers, as the premium indicates potential undervaluation opportunities, but corrections could deepen if retail selling persists.

For a bullish continuation, Bitcoin needs sustained buying volume and a rebound in OI, confirming new long positions. A retest of the $108,500 resistance could occur, with strong momentum signaling a sustained rally. Conversely, a bearish outlook could emerge if funding rates spike further without OI support, suggesting a possible reversal. A drop to $102,000 and declining volume could trigger a deeper correction, especially if sentiment shifts bearish again. The current short-covering rally may evolve into a bull run or a pullback, as volatility remains evident this month.