Bitcoin tops $85,000 as short liquidations fuel rally

Bitcoin surged above $85,000 as short liquidations accelerated its strongest advance since January. BTC gained more than 5% over the past 24 hours to reach $85,193, extending its advance over the past 35 days to about 29%. It had eased to $84,545 as of press time after breaking through levels that had constrained its recovery for much of the year. About $750.5 million of leveraged crypto positions were liquidated over the past 24 hours, according to CoinGlass data. More than $648 million, or roughly 86%, came from short positions. About 137,386 traders were liquidated during the period. Bitcoin accounted for roughly $360 million of the liquidations, while Ethereum contributed nearly $171 million. The largest single liquidation was an $11.29 million BTC-USDT position on Binance. CryptoQuant data showed net taker volume on Binance rising from about $11 million to $618 million within an hour as European trading opened, indicating a sudden imbalance toward market buyers. CryptoQuant attributed part of the shift to improving geopolitical sentiment as investors responded to signs of potential diplomatic progress between the US and Iran. Oil prices also declined as markets considered the prospect of talks, supporting a broader return of risk appetite despite continued regional tensions. Bitcoin's open interest stood at about $28.83 billion, close to its May record, leaving a large pool of derivatives positions vulnerable to further price swings. Rising prices could force additional short sellers to cover, but a loss of momentum could cause leveraged long positions to unwind rapidly and create selling pressure. Bitcoin also closed above its 50-week moving average last week for the first time since November 2025, ending a 45-week stretch below that threshold. Galaxy Digital Head of Firmwide Research Alex Thorn said previous recoveries of the measure had often provided strong confirmation that Bitcoin had established its bear-market low. Galaxy research also showed that Bitcoin had previously reclaimed the 50-week average before falling below it again, including during the 2021-2022 bear market. Bitcoin moved back above its 365-day moving average near $83,000. CryptoQuant Chief Executive Ki Young Ju said holding that level could encourage momentum traders and institutional investors who had remained on the sidelines during the decline to return. Bitcoin analyst Joe Consorti argued that the market was tentatively entering a bull market. Santiment said new and active Bitcoin addresses remained near median levels between July 24 and Sept. 20 despite the price breakout. Social activity rose to 1.23 times its baseline, and transactions worth more than $100,000 reached 1.18 times normal levels, but neither measure reached a two-month high. During Bitcoin's Aug. 21 rally, when the asset gained almost 7%, new addresses reached 1.07 times their baseline and active addresses reached 1.14 times. Santiment said 10 weekdays over the past two months produced more new wallets than the latest Sept. 18 breakout session. Open interest rose about 9% on Sept. 18 and remained elevated, highlighting the gap between leveraged market participation and activity on the Bitcoin network. The rally's durability may therefore depend on fresh spot demand emerging as forced buying from short liquidations fades.