Bitcoin has surpassed the $85,000 threshold following a remarkable surge that commenced on Wednesday after US President Donald Trump declared a 90-day halt on reciprocal tariffs for all nations except China. This announcement instilled a renewed sense of optimism in financial markets, alleviating investor apprehensions and sparking fresh momentum within the crypto sphere. Since that announcement, BTC has rallied by more than 15%, signifying one of the most robust short-term recoveries observed in recent times.
Market sentiment has rapidly transformed as buyers re-enter the fray, and Bitcoin’s strength above crucial technical levels indicates increasing confidence among traders. However, underlying dynamics suggest that caution should be exercised. Insights from CryptoQuant reveal that this rally is largely driven by leverage. Analysts caution that a leverage-induced pump is in progress, not just for Bitcoin, but also for key altcoins, potentially heightening volatility in the upcoming sessions.
While the recent rebound has reignited bullish prospects, reliance on leveraged positions may render the market susceptible to abrupt corrections. The pivotal question in the days ahead is whether this momentum can be maintained or if it will precipitate another wave of liquidations.
Bitcoin Confronts Critical Challenge Amid Leverage-Driven Surge
Bitcoin is now confronting a significant challenge as bullish traders strive to reclaim the $90,000 level, a critical barrier that could validate a recovery rally and indicate the conclusion of the recent downtrend. After enduring weeks of relentless selling and macroeconomic unpredictability, Bitcoin has rebounded sharply from below $75K levels, currently trading just over $85K. Nevertheless, despite this impressive resurgence, the overall market remains apprehensive.
Global tensions, particularly those involving US trade policies and the potential risk of a generalized economic downturn, continue to inject volatility into financial markets. Bitcoin, frequently regarded as a high-risk asset, is still 22% below its all-time highs as it endeavors to regain momentum. Although bullish indicators are emerging, concerns are rising that this recent surge may not be entirely organic.
Prominent analyst Maartunn highlighted on X that this latest movement appears to be driven by leverage. His data indicates a notable increase in Bitcoin’s Open Interest correlating with the price surge — a signal that leveraged positions are propelling the rally. Moreover, Maartunn noted that this trend is not unique to Bitcoin; Ethereum (ETH) and Ripple (XRP) are exhibiting similar leverage-driven characteristics.
This trend raises the risk of severe corrections if positions are abruptly unwound. With funding rates and open interest rising across major assets, the next few days will be critical. If bulls succeed in pushing BTC above $90K and maintain that momentum, the recovery could persist. Conversely, failure to break this critical resistance — coupled with excessive leverage — could trigger another wave of long liquidations and renewed selling pressure.
Testing Significant Technical Levels Amid Recovery Efforts
Bitcoin is currently valued at $84,900 as bulls attempt to break through a pivotal technical milestone: the 200-day Exponential Moving Average (EMA). Just above that lies the 200-day Simple Moving Average (SMA) at approximately $87,300, positioning BTC less than 3% away from surpassing both essential resistance areas. These indicators typically function as long-term trend signals, and reclaiming them would bolster the case for a complete recovery rally.
If bulls succeed in lifting the price above the recent local peak of $88,800, it could confirm a short-term trend reversal and open pathways towards $94K and beyond. Momentum is building following a 15% increase over the last few days, partly boosted by macroeconomic relief, including a 90-day suspension of US tariffs.
Nonetheless, risks persist. A failure to maintain the $82K support level would signal bearish sentiment, likely intensifying selling pressure. A decisive drop below $82K could drag BTC back under $80K, erasing recent gains and putting bullish sentiment back on the defensive. With volatility remaining high and market sentiment mixed, the next few days will be pivotal in determining whether BTC can uphold this upward trajectory or if it will encounter renewed downside.
Featured image from Dall-E, chart from TradingView
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