Analysis: The recent rise in Bitcoin is driven by spot demand, with potential short squeeze risks increasing

On-chain data and derivatives data indicate that the rise in Bitcoin prices is primarily driven by spot demand, while the risk of short squeezes is increasing. Bitcoin has risen about 10% year-to-date, maintaining a price below $97,000. This increase is mainly driven by spot purchases rather than leveraged positions established through futures.

Spot-driven increases are generally healthier than leveraged-driven increases. Recently, the price movement from $90,000 to $97,000 has shifted from a leverage-dominated rise to one supported by spot purchases over the past week. Additionally, according to market news, the open interest in Bitcoin-denominated futures stands at 678,000 BTC, which is comparable to 679,000 BTC, indicating that the overall leverage in the system has remained essentially unchanged, with the perpetual futures funding rate currently being negative.