On Friday the 13th, the crypto market is attempting another breakout despite sharp sell-offs in traditional financial markets. While the Dow Jones, Nasdaq, and S&P 500 each lost between one and two percent the previous day, Bitcoin climbed above the 72,000$ level overnight. Meanwhile, Ethereum, XRP, and Solana are posting gains of more than 4% on a daily basis.
Global markets remain dominated by uncertainty amid the escalating conflict in the Middle East. A rapid surge in oil prices following the closure of the Strait of Hormuz has forced investors into a more defensive stance. However, Bitcoin and other crypto assets continue to show relative strength.
Short squeeze, ETFs and liquidity factor
Market observers point to negative funding rates on derivatives exchanges — a signal that traders are heavily positioned on the short side. Analysts at Glassnode believe this situation could trigger a short squeeze, especially if inflows into the spot market continue.
At the same time, spot Bitcoin ETFs continue to record steady capital inflows. Since the beginning of the week, more than half a billion dollars has flowed into these investment products. For traders holding short positions, this may come as an unpleasant surprise. However, the scale of a potential rally remains uncertain.
Glassnode analysts describe the current situation as “accumulation without conviction.” Previous attempts to break above the 75,000$ level have already failed.
Volatility ahead
Macro analysts believe that Bitcoin and crypto assets may already be anticipating upcoming monetary and fiscal policy measures. According to Bloomberg, volatility in U.S. government bonds — measured by the MOVE Index — has climbed to a nine-month high.
This creates several possible scenarios for the crypto market. On one hand, growing pressure on the U.S. budget and signs of expanding liquidity to stabilize financial markets could support risk assets.
On the other hand, persistently high inflation could force central banks to raise interest rates again. A similar situation occurred in 2022, when the crypto market entered a deep bearish cycle.
