Bitcoin Jumps Toward $100,000 as Short Squeeze, ETF Inflows, and Cooling Inflation Spark Breakout
Bitcoin (BTC) surged on Wednesday, reaching its highest level since mid-November as a powerful mix of forced liquidations, renewed institutional inflows, and easing inflation data reignited bullish momentum across the crypto market.
The world’s largest cryptocurrency rose as much as 4% to just under $98,000, breaking out of a weeks-long trading range that had frustrated both bulls and bears. The move puts Bitcoin back within striking distance of the psychologically important $100,000 level after spending much of December and early January lagging rallies in stocks and precious metals.
Short Sellers Caught Off Guard as Momentum Builds
The rally accelerated after a sharp short squeeze rippled through crypto derivatives markets. As Bitcoin pushed higher, traders betting against the asset were forced to unwind positions, triggering a cascade of liquidations that added fuel to the advance.
Data from crypto analytics firms shows that roughly $700 million worth of bearish positions across digital assets were wiped out in the past 24 hours, with Bitcoin accounting for the largest share. The sudden move underscores how crowded short positioning had become during Bitcoin’s recent period of consolidation.
Inflation Data and Fed Tensions Shift the Macro Backdrop
Bitcoin’s breakout followed fresh U.S. economic data showing inflation continuing to cool, reinforcing expectations that the Federal Reserve will keep interest rates steady in the near term. That shift has boosted appetite for assets seen as beneficiaries of easier financial conditions, from equities to commodities to cryptocurrencies.
At the same time, growing political pressure on the Fed and renewed debate around central bank independence have added another layer to Bitcoin’s appeal. Market strategists say the environment has revived interest in so-called hard assets as alternatives to fiat currencies, even as the dollar remains relatively stable.
ETF Flows Signal Renewed Institutional Confidence
Institutional demand has also reemerged as a key driver of the rally. U.S.-listed spot Bitcoin exchange-traded funds recorded more than $750 million in net inflows in a single day, marking their strongest showing since early October. The surge suggests that large investors who had been sitting on the sidelines are stepping back in, encouraged by a more stable inflation outlook and improving regulatory clarity. Analysts note that ETF flows have increasingly become a reliable barometer of longer-term conviction in Bitcoin’s price trajectory.
Regulatory Momentum Lifts Sentiment
Optimism around U.S. crypto regulation has further supported prices, as lawmakers advance efforts to establish clearer rules for the digital asset market. While final legislation remains in flux, the direction of travel toward formalized oversight has eased concerns that have weighed on crypto since last year’s regulatory crackdowns. Globally, policymakers are signaling a more pragmatic approach to digital assets, focusing on market structure and consumer protection rather than outright restriction — a shift investors see as constructive for the sector’s long-term growth.
Looking Ahead
With Bitcoin now firmly above key technical levels, traders are watching to see whether the rally can sustain momentum and push decisively through $100,000. A clean break higher could draw fresh inflows from trend-following investors, while failure to hold recent gains may invite renewed volatility. As earnings season unfolds and policymakers continue to shape the macro and regulatory landscape, Bitcoin’s next move is likely to hinge on whether institutional demand and supportive economic data can outweigh lingering risks from geopolitics and market positioning.
