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Bitcoin’s recent surge is setting the stage for a potential short squeeze near the $114K mark, signaling a possible local peak in the crypto market.
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On-chain metrics reveal sustained demand and capital inflows, yet caution is warranted as a longer-term correction could emerge by late 2025.
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According to COINOTAG sources, the current rally is supported by strong realized cap impulses, but historical resistance levels hint at a cyclical downturn ahead.
Bitcoin’s rally may trigger a short squeeze near $114K before a long-term correction begins, supported by on-chain demand but facing structural resistance.
Short Squeeze Potential at $113K-$114K: A Critical Resistance Zone
Bitcoin’s upward momentum is increasingly fueled by a growing number of short positions clustered around the $113K-$114K price range. This concentration of leveraged bets creates a classic setup for a short squeeze, where forced liquidations could rapidly accelerate buying pressure. As BTC approaches this zone, traders should anticipate heightened volatility and a possible sharp spike in price as shorts are squeezed out.
However, this surge is likely to be a temporary local top rather than a sustained breakout. The significant open interest at these levels suggests that while the short squeeze may propel Bitcoin higher in the short term, it also marks a critical resistance point where upward momentum could stall.
Source: Alphractal
Robust On-Chain Demand Supports Current Price Action
Despite the volatility and leveraged trading activity, Bitcoin’s on-chain fundamentals remain strong. The realized capitalization impulse metric continues to respect its mid-baseline and decision zones, indicating persistent accumulation rather than distribution. This suggests that the current price rally is underpinned by genuine capital rotation and investor conviction.
Historically, significant bearish trends have only materialized when this metric falls into lower support zones, which is not the case at present. The ongoing upward trend in realized value reinforces the notion that Bitcoin’s price strength is sustainable through at least the near term, likely extending into the fourth quarter of this year.
Source: Alphractal
Long-Term Outlook: Approaching a Structural Turning Point
While the short-term outlook remains bullish, the long-term realized cap impulse metric is nearing historical resistance levels that have previously signaled the onset of extended bearish phases. This suggests that Bitcoin may be approaching the final stage of its current capital inflow cycle.
Market analysts from COINOTAG indicate that this peak is likely to occur around October 2025, after which Bitcoin could enter a prolonged correction lasting up to a year, potentially extending into late 2026. This cyclical transition underscores the importance of prudent risk management for investors as the market prepares for a possible downturn.
Source: Alphractal
Conclusion
Bitcoin’s current rally is characterized by a potential short squeeze near $114K, supported by strong on-chain demand and capital inflows. However, the concentration of leveraged positions at this resistance zone suggests a likely short-term peak. Looking ahead, the long-term realized cap impulse metric signals a possible transition into a bearish phase by late 2025, emphasizing the need for cautious optimism. Investors should monitor these key levels closely and prepare for increased volatility as the market navigates this critical juncture.
