Short covering totaling more than $1.45 billion, prompting a short squeeze, caused Bitcoin to bounce back and briefly exceed $70,000.

On Monday, the price of Bitcoin broke through the $70,000 mark for the first time since March, rising more than 4% to reach around $70,300 before narrowing its gains. At the same time, mainstream cryptocurrencies such as Ethereum and Solana also saw strong gains. This increase was mainly driven by the covering of short positions in the market. Despite the uncertain prospects for a ceasefire in the Middle East, with Iran rejecting a temporary ceasefire proposal and demanding a complete end to the conflict, the overly pessimistic market position structure quickly adjusted. Diana Pires, Chief Business Officer at sFOX, stated that market sentiment was noticeably bearish before the weekend, with many short positions accumulated, and news related to a ceasefire triggered large-scale closing of positions, pushing prices upward. Data shows that over $145 million in short positions were forcibly closed within the past 24 hours. CoinGlass pointed out that as the price of Bitcoin rose, more short positions passively exited through stop-loss orders. Damien Loh, Chief Investment Officer at Ericsenz Capital, stated that in a low liquidity environment, short positions are moving to other assets and covering their positions, exacerbating a "short squeeze" in prices. However, looking at a longer period, Bitcoin is still in a range of fluctuations. Since the outbreak of the Iran conflict at the end of February, Bitcoin has been fluctuating between $60,000 and $75,000, briefly reaching close to $76,000 but then falling back. For most of the past two weeks, its price has been below $70,000. Blockchain data firm Glassnode pointed out that whenever Bitcoin approaches the $70,000 to $80,000 range, there is thin market liquidity and evident profit-taking pressure, limiting the rebound space. Meanwhile, the options market is shifting towards a more defensive setup. In terms of the derivatives market, the largest open interest contracts are concentrated on put options at $60,000. Data from Deribit under Coinbase showed that investors are still hedging potential downside risks through put options. On the other hand, there are signs of improvement in institutional fund outflows. The U.S.-listed spot Bitcoin ETF recorded a net inflow of around $22.3 million last week, a significant recovery from the net outflow of nearly $300 million the previous week. However, overall market participation remains low. Glassnode pointed out that whether it is exchanges, ETFs, or on-chain activities, the level of fund participation has not significantly recovered, indicating that the sustainability of the current rebound is still to be observed. Analysts believe that for a more solid upward trend, trading volume, fund inflows, and on-chain activity need to increase simultaneously.