Analysis: Bitcoin could test $90,000 after a short squeeze, but leverage risks are on the rise.

Bitcoin surged past the key resistance level of $82,000 to hit a high of $87,300, triggering liquidations of around $750 million in bearish crypto derivative positions, with buying pressure from short covering further fueling the price rally. Since the breakout, Bitcoin’s derivative open interest has added roughly $2 billion, indicating a rapid return of market leverage. Nansen analyst Nicolai Sondergaard noted that “prices are turning bullish faster than position adjustments.” U.S. spot Bitcoin ETFs, which had faced headwinds from the CLARITY Act and Federal Reserve rate hikes, saw a combined outflow of $746 million on Tuesday and Wednesday, followed by inflows of $160 million and $433 million on Thursday and Friday respectively. The average cost basis for U.S. Bitcoin ETF holders is around $82,200; with Bitcoin breaking above this level, ETF investors as a whole have returned to profitability. Looking ahead, Sondergaard identifies $87,000 as the next key level, with $90,000 and $92,000 as subsequent targets; Wintermute trader Jasper De Maere also believes Bitcoin could test $90,000. However, he pointed out that breaking above the 50-week moving average is merely a positive signal, and significant volatility could still occur in the short term. The market is now closely watching whether spot and ETF inflows can sustain the rally. Sondergaard warned that if spot demand fails to keep pace with the growth in derivative leverage, the rally could become leverage-driven and reverse rapidly amid rising U.S. Treasury yields or geopolitical shocks. Wintermute advised focusing on ETF flows, perpetual contract open interest and funding rates in the coming days, as well as the options expiration this Friday.