As macro uncertainty increases, weak numbers are worrying top privateers.
It was striking that that tension was fully expressed this week. It started with the CPI coming in below expectations, which immediately turned the market bullish.
The result?
Classic sweeps were activated on all exchanges.
Short squeeze boosts BTC to $95k
There was more than $500 million worth of shorts liquidatedThis is the largest short squeeze since the October crash. Meanwhile, Bitcoin [BTC] fell 4.57% to end the day around $95,000, a level not seen since mid-November.
Source: TradingView (BTC/USDT)
That said, the bigger question now is whether this rally has legs.
Technically speaking, BTC spent almost seven weeks consolidating around $90,000 before moving further towards $95,000, marking a classic post-range expansion. Still, a purely V-shaped recovery seems unlikely.
Looking ahead, the Supreme Court’s tariff ruling, scheduled for January 14, adds new macro risks, potentially blowing a hole in government revenues and what some say a major ‘budget shock’.
Matt Mena, Crypto Research Strategist at 21Shares, told AMBCrypto:
“Next Wednesday’s expected Supreme Court ruling on federal tariff authority will be a huge volatility driver for both the dollar and risk assets.”
He continued,
“Meanwhile, in DC, the GENIUS and CLARITY bills are moving toward critical votes in the Senate; formalizing a US DeFi framework and digital asset market structure would provide the institutional ‘seal of approval’ needed for the next phase of the bull cycle.”
Against this setup, Bitcoin’s rally will face a real test. In fact, on-chain metrics and whale positioning suggest that BTC is unlikely to come through unscathed, setting the next few hours up for increased volatility.
On-chain data shows that Bitcoin’s momentum is still speculative
In the current macro setup, the last thing bulls want to see is a divergence.
Yet that is exactly where Bitcoin is now. Looking closer, CoinMarketCap noted that apart from Strategy [MSTR]most BTC DATs have taken a step back, leaving corporate demand largely on the sidelines.
Meanwhile, CryptoQuant highlighted mounting pressure at key support levels as new BTC whales dive deeper into unrealized losses, pushing their unrealized win ratio below zero for the first time since May 2022.
Source: CryptoQuant
Notably, this move caused Bitcoin to pull back almost 70% at the time.
That said, a repeat seems unlikely ETF question still holds up.
However, current flows suggest (following CoinMarketCap) that BTC’s momentum is driven more by derivatives than spot accumulation.
Mena commented:
“Bitcoin is being repriced as an international reserve indifferent to disputes over sovereign borders. This ‘neutrality’ is reinforced by record low foreign exchange reserves and steady returns from ETF inflows, which effectively set a floor price for the asset regardless of short-term interest rate volatility.”
This ‘divergence’ comes at a difficult time. As volatility increases in the run-up to the rate ruling, these speculative flows could trigger another major liquidity event, quickly eroding the optimism built around the CPI data.
Final thoughts
- Speculative on-chain flows and whale losses leave Bitcoin vulnerable, with momentum driven more by derivatives than spot accumulation.
- Rising macro volatility ahead of the rate ruling could trigger a liquidity event, quickly erasing CPI-driven optimism.