Bitcoin Inches Toward $120K as Traders Eye $18B Short Squeeze

Bitcoin (BTC) is on the verge of breaking a major price milestone, as traders anticipate a massive $18 billion short squeeze that could propel the cryptocurrency toward the $120,000 mark. Over the weekend, BTC surged to new August highs, sparking predictions of a record-breaking rally in the coming weeks.

New August Highs Fuel Bullish Sentiment

According to market data from Cointelegraph Markets Pro and TradingView, BTC/USD climbed to $118,760 on Bitstamp, marking its highest point this month. This move came just hours before Bitcoin’s weekly close — a moment traders have described as “decisive” for setting the tone for the week ahead.

Over the last 24 hours, crypto markets witnessed significant liquidations, totaling $350 million, based on figures from CoinGlass. A large portion of these were short positions, indicating that bearish traders were caught off guard by Bitcoin’s strength.

Traders Prepare for a Potential Short Squeeze

Prominent trader and analyst Rekt Capital noted that Bitcoin is “on the cusp” of reclaiming the $117,200 level as a support zone. If BTC successfully maintains this range, it could serve as a launchpad for further gains.

Another well-known trader, BitBull, pointed out that just a 10% price increase from current levels could trigger over $18 billion in short liquidations. He suggested that institutional investors and “big money” are likely monitoring this closely.

“My guess is that Monday could start off slightly bearish as BTC retraces some of its weekend pump,” BitBull said. “But once that settles, I wouldn’t be surprised to see Bitcoin push above $120,000.”

Historical Trends Support Breakout Thesis

Charts comparing Bitcoin’s current price action to previous bull markets suggest that BTC might be entering a similar breakout phase. Fellow trader Merlijn agreed with the $120K target, attributing the potential move to the pressure building on short sellers.

The CME Gap Factor — $116,500 Level in Focus

While optimism is high, traders are also watching for potential dips. Ted Pillows, a crypto investor and entrepreneur, highlighted the presence of a CME gap around $116,500. These gaps occur in Bitcoin’s futures market when trading halts for the weekend and the price reopens at a different level, creating unfilled zones on the chart.

“Historically, Bitcoin tends to return to fill these gaps,” Pillows explained. “Last week, BTC fell by $2,000 to fill a previous gap. If the $116.5K level gets tested and filled, we could see a strong rebound toward a new all-time high.”

Weekend Trading Brings Choppy Price Action

Despite the impressive price movements, some traders described the weekend as more “choppy” than trending. Daan Crypto Trades noted that much of the attention over the weekend was on Ethereum (ETH), which recently broke its cycle highs and reached multi-year price levels.

However, Daan believes that once Bitcoin surpasses $120K and approaches its all-time high, it will reclaim the spotlight from altcoins.

Ethereum’s Role in the Market Narrative

While Bitcoin remains the dominant force in the crypto market, Ethereum’s recent rally has contributed to a broader sense of optimism across the sector. With ETH breaking through major resistance levels, altcoins have also seen substantial price movements, adding to the overall bullish sentiment.

Market Outlook: Eyes on $120,000 and Beyond

For Bitcoin, the next few days could be crucial. If the cryptocurrency manages to hold above $117,200 and overcome the $120K barrier, it may open the door for a sustained rally to new record highs. Traders are particularly focused on the liquidity dynamics that could trigger a chain reaction of short liquidations.

On the other hand, failure to maintain current support levels could see BTC retrace to $116,500 to close the CME gap before attempting another push higher. Either way, analysts believe that Bitcoin is in a position of strength heading into the new trading week.

Key Takeaways

• Bitcoin touched $118,760, marking new highs for August.
• A 10% rise from current levels could liquidate over $18B in short positions.
• The $116,500 CME gap is a potential short-term target before further gains.
• Traders see $120,000 as the next major milestone, with all-time highs within reach.

Final Thoughts

As Bitcoin edges closer to $120K, the crypto market is bracing for a potentially explosive week. While some caution is warranted due to possible retracements, the combination of bullish technical setups, short squeeze potential, and strong market sentiment could make this one of the most pivotal moments for BTC in 2025.

Disclaimer: This article does not constitute financial advice. Cryptocurrency investments carry risk, and readers should conduct their own research before making decisions.