Bitcoin’s bullish march continues as it flirts with the $115,000 mark, a threshold that could trigger a massive short squeeze and potentially liquidate over $7 billion in short positions. Over the past few weeks, Bitcoin has exhibited solid gains, hitting $110,700 on May 27, 2025, buoyed by robust U.S. equities and a strategic move by the Trump Media and Technology Group to inject $2.5 billion into a Bitcoin treasury. This financial maneuver, coupled with favorable macroeconomic conditions, has set the stage for Bitcoin’s current momentum.
A Macro Backdrop for Bitcoin’s Ascent
Ecoinometrics, a notable newsletter focusing on macroeconomic trends, points to a marked shift in the U.S. National Financial Conditions Index (NFCI) as a significant driver behind Bitcoin’s recent rally. The NFCI, a tool used to gauge the stress levels in the financial system by examining credit spreads, leverage, and funding conditions, has shifted into much looser territory following a tightening phase earlier this year. This shift, according to Ecoinometrics, encourages a risk-on sentiment among investors, making high-beta assets like Bitcoin particularly attractive.
“The return of liquidity within the past month has created a supportive macroeconomic environment for risk assets,” Ecoinometrics notes. “This is the kind of macro backdrop where Bitcoin thrives.” The newsletter underscores that Bitcoin’s path to new highs is part of a broader pattern observed since 2023: easing conditions lead to capital rotation and a renewed appetite for risk. This trend is further evidenced by recent developments as Bitcoin Surges Past $94,000 amid growing institutional interest and market optimism.
Onchain Indicators Flash Warning Signs
While Bitcoin’s upward trajectory is undeniable, cautionary signals are emerging from the onchain data. Two pivotal indicators, the Supply in Profit Market Bands and the Advanced Net UTXO Supply Ratio (NUSR), suggest that Bitcoin is entering an “overheated zone.” These metrics, which track the profitability of the circulating BTC supply and the ratio of profitable versus unprofitable UTXOs, respectively, are nearing historical peaks.
As of late May 2025, 19.4 million BTC are in profit, pushing the Supply in Profit Market Bands towards levels that historically precede market corrections. Similarly, the NUSR is approaching its ceiling of 0.95, a level often associated with impending sell signals. Historical data shows that such conditions have led to local price tops or prolonged consolidations, raising questions about whether the current rally can sustain itself. Analysts have voiced similar concerns in Bitcoin Surpasses $95K Amid Resilient U.S. Stocks, highlighting potential market perception issues.
The Looming Short Squeeze
Despite the cautionary onchain signals, the potential for a short squeeze remains high. Data from CoinGlass indicates that Bitcoin is just 2% shy of its all-time high, and a breach of the $115,000 mark could trigger significant liquidations. If this scenario unfolds, over $7 billion worth of short positions might be liquidated, potentially creating a cascading effect that propels Bitcoin’s price even higher.
Market participants are keeping a close eye on these developments, as the interplay between macroeconomic factors and onchain metrics could dictate Bitcoin’s trajectory in the coming weeks. While the bullish momentum seems poised to extend, the possibility of increased volatility and profit-taking looms large.
As Bitcoin continues to navigate these turbulent waters, investors and traders are urged to conduct their own research before making any investment decisions. The cryptocurrency market remains inherently volatile, and the current landscape underscores the importance of staying informed and vigilant.
The future remains uncertain, with potential for both continued growth and sudden reversals. Will Bitcoin’s rally persist, or will the market heed the cautionary signals and adjust course? As always, the crypto world watches with bated breath.
Source
This article is based on: Bitcoin profit taking lingers, but rally to $115K will liquidate $7B shorts
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Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
