The shorts got squeezed
A short seller borrows bitcoin and sells it, planning to buy it back cheaper later and pocket the difference. That plan works until the price moves the other way, and then the exchange closes the position for them by buying bitcoin back at the market price. That forced buying feeds the rally, which forces more shorts to close. CoinGlass data show about $222 million in bitcoin short positions were closed within the hour to about 10:25 a.m. ET, and nearly all of the bitcoin liquidations in that hour were shorts getting wiped out. Glassnode found traders had piled into shorts all week as the price fell, with the largest cluster of forced buying sitting near $87,000, close to bitcoin's September high.
Options traders saw it coming before the spot market did. On election day, about $660 million in bitcoin options blocks changed hands on Paradigm, more than double the day before, and roughly $420 million of that was traders buying call options, which pay off when the price rises, against only about $105 million in puts sold. Markus Thielen, founder of 10x Research, told CoinDesk before the break that bitcoin looked oversold on momentum indicators and could climb toward $82,000, and by the evening the price was already most of the way there. Open interest in bitcoin futures also rose through the day, which Glassnode reads as traders opening fresh longs rather than just closing old shorts. The squeeze was only part of the story, because new money was also deciding the dip was worth buying.
Wall Street did the heavy lifting
The rebound gathered pace once US markets opened, with megacap tech stocks leading an early rally while Treasury yields and oil prices fell, and crypto rode the same wave of relief. Traders had priced in a Democratic win for weeks: Polymarket had the odds of a Democratic sweep above 75 percent for a while, according to Nicolas Quatravaux, head of EMEA at crypto derivatives network Paradigm. "The result itself wasn't really a surprise," he told CoinDesk, adding that overnight was less about the outcome and more about the uncertainty going away. Dick Lo of TDX Strategies said the same: bitcoin dropped at first on the sweep, then recovered once a clear outcome removed the uncertainty. Once the market knew the result, it stopped worrying and started buying.
The buyers who matter most have not shown up yet
For all the fireworks, there are reasons to keep the excitement in check. The Coinbase Premium, a gauge of US demand for bitcoin, stayed below zero through Wednesday's jump, which means American buyers were not the ones driving the move. Spot bitcoin ETFs lost more than $500 million over the two trading sessions through Tuesday, according to Farside data, and total outflows have now passed $1 billion over the recent stretch. Giottus chief executive Vikram Subburaj told CoinDesk that if bitcoin holds above $78,000 while ETF redemptions continue, it would show buyers elsewhere are absorbing the supply. Until ETF flows turn positive, the rally is running on derivatives and momentum rather than the steady spot buying that sustains a real trend.
Glassnode puts support between $73,000 and $76,000, where newer buyers' average cost, the 200-day average and a block of long liquidations all meet, and the firm says holding that zone would mark a healthy reset inside the uptrend that started in August. A break below $73,000 would point to a longer consolidation instead. The next test comes Friday, when the US jobs report lands and traders get fresh data on the economy and interest rates. For now, the scoreboard is simple: bitcoin fell below $76,000, climbed back above $80,000, and the shorts lost about $300 million in a day.
Bitcoin went from below $76,000 to above $80,000 in about a day, and the traders who bet against it paid roughly $300 million for the privilege. The squeeze can keep feeding itself if the price keeps climbing toward the shorts waiting near $87,000, but the rally will need real buyers to last, and so far the US spot market and the ETFs have stayed on the sidelines. Friday's jobs report gets the next say, and until the flows turn, this is a sharp bounce inside a market that is still more than a third below its highs, not a victory lap.
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Author: Dorian Fenwick
Silicon Valley Newsroom
GlobalCryptoPress | Breaking Crypto News
