After experiencing the largest weekly decline in six months, Bitcoin surged back above $71,000, is a short squeeze coming?

On Monday, Bitcoin reversed the decline of last week, with spot Bitcoin ETFs surging by about 11%. The CME Bitcoin futures BTC main contract reported $71,075, up 6.84% from last Friday's New York closing, trading in the range of $66,390 to $71,425 during the session.

Other cryptocurrencies also generally rose on the same day. The CME Ethereum futures DCR main contract reported $3,637.5, up 6.17% from last Friday, trading in the range of $3,424 to $3,660 during the session. Many of the top 10 cryptocurrencies by market capitalization saw mostly positive gains in the past 24 hours, with most also achieving cumulative increases over the past 7 days.

Concept stocks related to cryptocurrencies mostly rose on Monday, with some experiencing significant gains. "Bitcoin holder" MicroStrategy MSTR rose by 21.86%, CleanSpark by 19.88%, Cipher Mining by 13.85%, Iris Energy by 10.49%, cryptocurrency exchange Coinbase by 9.47%, Hut 8 by 7.8%, Ninth City ADR by 5.66%, popular brokerage Robinhood by 4.26%, and Ebang International ADR by 1.92%. Canaan Technology ADR remained flat, Bitfarms fell by 0.87%, and Mercurity FinTech fell by 6.67%.

Last week, Bitcoin experienced its largest weekly decline in six months. Nearly $900 million flowed out of Bitcoin spot ETFs, mainly due to outflows from the high management fee Grayscale, as well as a slowdown in subscriptions to related products from BlackRock and Fidelity.

Last week's significant outflows triggered more hedging by traders against price declines, as well as a large number of leveraged long positions in the cryptocurrency futures market being closed.

According to Goldman Sachs data, in the futures market, the number of open Bitcoin contracts hit a new high, exceeding 33,000 contracts with a nominal value of nearly $12 billion. The number of contract holders also approached a record high. Goldman Sachs also noted that during the week of March 5th to 12th, institutions were net buyers, with a scale exceeding 3 standard deviations, while hedge funds or leveraged investors were net sellers, with a scale also exceeding 3 standard deviations. Institutional net long positions and hedge fund net short positions are at record levels, and the concentration of long positions is also significantly higher than the average level.

The mysterious buyer known as "Bitcoin Whale" and "Mr. 100" made another move. Data over the weekend showed that this buyer bought all mined Bitcoins in the past two daysA mysterious buyer has been purchasing an average of 100 bitcoins per day since November 2022. Analysis suggests that he may not be an individual investor, but possibly a large bank behind one of the few existing physical bitcoin ETFs, although some are skeptical of this view.

Financial blog Zerohedge stated:

In the past week, the largest short/sell volume of non-commercial Bitcoin CME futures since October last year has appeared.

Another epic short squeeze is coming.

Co-founder of the digital asset hedge fund INDIGO Fund, Nathanaël Cohen, commented:

Despite the drag on ETF inflows, buying orders around $60,000 remain high, indicating a market eagerness to buy on the dip.

Earlier this month, Wall Street News mentioned that the net flow of bitcoin spot ETFs exceeded 30,000 bitcoins earlier in March, with analysis warning that at this rate, a "seller liquidity crisis" could occur in September. Some analysts point out that once a seller liquidity crisis occurs, due to restricted liquidity for sellers and lower order volumes, the next cyclical peak for Bitcoin may exceed our expectations