Bitcoin's $87,400 Rally Shows First Cracks as Short Squeeze Exhausts, Longs Take Liquidation Risk

Rally runs out of fresh buyers

Bitcoin climbed to an eight-month high near $87,400 last week, reclaiming a long-term threshold CryptoQuant flagged as the start of a new bullish phase. The Bull Score Index sits at 90/100, and sentiment hit its greediest reading since July 2025. Beneath the headline strength, the demand picture is fading.

Demand metrics weaken across the board

CryptoQuant estimates apparent spot demand contracted roughly 170,000 BTC over 30 days, and ETF daily inflows fell 97% from around $1 billion to $31 million by Sept. 28. Futures demand growth dropped to ~16,000 BTC from 164,000 BTC on Sept. 14. Short-term traders' unrealized profit margin reached 33%, its highest since December 2024, and holders realized profits on 25,700 BTC on Sept. 22 — the largest single-day total of 2026.

Derivatives structure shifts

The spot-to-futures volume ratio on Binance sits at 0.12, meaning roughly 90% of activity is in futures. Binance open interest dropped to $9.2 billion from $10.6 billion, and Glassnode shows coin-denominated OI down nearly 20% to its lowest since March. Alphractal data indicates the rally swept through the year's largest short-liquidation pool, forcing bears out. The largest unliquidated clusters are now concentrated on the long side.

Whales hesitate, levels matter

Alphractal CEO Joao Wedson said the Whales vs. Retail Delta turned bullish relative to retail but failed to persist. Key downside levels: the 365-day MA near $80,000, the 200-day MA near $71,000, and realized price around $67,000. A retreat toward $80,000 will be the first test of whether the breakout can hold.

Source: CryptoSlate