Bitcoin (BTC) has seen a significant rally, climbing more than 3% to break the $61,000 mark. This movement came after a period of range-bound trading which had been characterised by high volatility in the light of recent macroeconomic developments in the United States.

In particular, the adjustment of US employment data and the Federal Reserve’s meeting minutes, which were more dovish than expected, led to a short-lived spike, during which BTC/USD touched $61,000 and then fell back to $59,500.

Source: CoinMarketCap

The market’s response also involved massive liquidations. Statistics from CoinGlass showed that about $124 million worth of crypto positions were liquidated within a day. This liquidation activity is a testimony to the bull and bear struggle, as Bitcoin was unable to sustain the upward momentum between $59,500 and $61,000 before finally breaching it.

Short Squeeze Potential as Open Interest Rises

Analysts have cited the short squeeze as the primary driver of Bitcoin’s recent price action. The open interest in Bitcoin Perpetual contracts has surged by 30,000 BTC since mid-August.

The increase in open interest combined with the negative funding rates indicates that more traders are prepared for further losses, which could lead to a short squeeze.

Market watchers such as Vetle Lunde of K33 Research have mentioned that such conditions make the market “ripe for a short squeeze.” If the short positions start to be covered, Bitcoin could rapidly climb with the next key resistance levels being seen at $64,800 to $65,000.

Resistance Levels Ahead: $64K-$66K Poses a Challenge

However, Bitcoin has encountered substantial resistance near the $64,000 to $66,000 level even after the latest surge. This zone is crucial because it coincides with the realized price for short-term holders, which is a measure that indicates the average purchase price of investors with a holding period of up to 155 days.

This level has provided strong support in bull markets, and hence, flipping it would require a lot of buying pressure.

Source: CryptoQuant

According to market analysts from CryptoQuant, short-term holders may begin to liquidate their positions as they begin to profit in this crucial area, which may put selling pressure in this range. Therefore, Bitcoin’s future will be determined at these resistance levels as it tries to maintain the current trend.

Institutional Activity and Miner Movements Add Complexity

Furthermore, institutional activity and miner behavior have become major factors that are influencing the current market environment. Institutional interest in Bitcoin remains strong as seen from the latest 13-F filings with industry heavyweights such as Goldman Sachs and Morgan Stanley adding spot Bitcoin ETFs to their portfolios.

However, the aggregate AUM of these ETFs has decreased, primarily because of Bitcoin’s fall from its previous high.

Source: CryptoQuant

Likewise, the miner OTC desk balances for Bitcoin have been rising and are at their two-year high, according to the CryptoQuant data. This rise may suggest that the miners are preparing to dump more Bitcoin into the market, which will put more downward pressure on the price of Bitcoin. Traditionally, this selloff by miners has been seen in bear markets for Bitcoin, and it is of particular importance as Bitcoin approaches $65k resistance.