This Bitcoin (BTC) Move 'Fake,' Here's Why

The recent spike in Bitcoin has enthralled traders, who are looking for a clear signal. Zooming out to see beyond the headlines, however, makes the move appear shallow. Our current rally is tactical, rather than revolutionary; it is primarily the result of short liquidations rather than actual new capital entering the market.

BTC is battling a long-standing descending resistance line close to $110,000 on the chart. Many will see this crucial area as the starting point of a breakout. On the other hand, the trading volume and on-chain profiles on the chart's right side show that activity has not increased in lockstep with the price.

Rather than a period of steady accumulation, the price spike is occurring in the context of comparatively flat or even declining volume, which is a classic indicator of a squeeze. The major warning sign is that this move possesses every characteristic of a short squeeze. The shaded volume clusters around the $100,000 support band indicated the accumulation of crowded short positions, which were quickly forced to cover as the price rose from the lows.

That is what is fueling this rally, not institutions buying large quantities of spot Bitcoin. Profit-taking is still definitely possible. Unrealized gains have been held by traders who invested in the mid-May dip, and many will view this price level as a chance to lock in profits. This spike is unlikely to become a clear breakout unless there is new demand to absorb that selling.

What is the strategy then? The bias should stay cautious until we see unambiguous proof of sustained inflows, which would suggest volume growing as the price breaks through resistance. This is a tactical rally rather than a general change in attitude.

Although the market structure remains intact, we are currently at a standstill because we are caught between the pressure to take profits and the dearth of new buyers. Until proven differently, this move appears to be more of a squeeze to remove over-leveraged shorts than the beginning of a bull market.