As per Coinotag, Bitcoin’s 15% rally from November 21 to December 9 was primarily driven by short covering, not new bullish demand, according to derivatives data from Velo and CoinGecko. Open interest declined during the rally, indicating short covering as the key driver. Cumulative volume delta stabilized, showing no significant influx of new buyers. Deribit data shows the 25-delta options skew improved from -11% to -5%, signaling better investor sentiment and potential bottom formation. Over $1.80 billion in short positions are at risk if Bitcoin surpasses $91,300, according to CoinGlass liquidation map data. A short squeeze could boost Bitcoin’s recovery, but sustained movement requires increased spot demand.
Bitcoin Rally Driven by Short Covering, Not New Demand
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Summary
Bitcoin’s 15% rally from November 21 to December 9 was fueled by short covering, not new bullish demand, per Velo and CoinGecko derivatives data. Open interest dropped during the move, while volume delta remained flat, showing limited new buying. Deribit’s 25-delta options skew improved from -11% to -5%, hinting at a potential bottom. Over $1.80 billion in short positions face liquidation if Bitcoin clears $91,300, per CoinGlass. A short squeeze could aid recovery, but sustained gains need stronger spot demand. Traders using event-driven trading should assess the risk-to-reward ratio before entering longs.
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