Bitcoin Rebounds 12% in Short Squeeze Rally Amid Warnings of 'Dead Cat Bounce'

Bitcoin staged a sharp rebound late last week, surging approximately 12% from a Thursday low near $60,000 to around $70,000–$71,000 by Friday. Analysts described the move as a short squeeze rather than a sustainable recovery driven by new buying interest.

The rally led to $283.42 million in crypto futures liquidations in just 24 hours, with Bitcoin shorts making up nearly 84% of those positions, according to data from Coinglass. The forced closure of bearish positions triggered a feedback loop of rapid buying, pushing prices higher in a classic squeeze pattern.

Analysts Sound Caution

Market observers warn the uptick may represent a “dead cat bounce”—a brief recovery in a broader downtrend. Several technical indicators reinforce this view. The Coinbase Premium Index has remained negative for 25 straight days, currently sitting at -0.0864%. This indicates persistent institutional selling pressure rather than accumulation.

“Such a negative premium suggests strong selling pressure from institutions that continues to weigh on price,” noted CryptoQuant analyst Darkfost.

Additionally, open interest in Bitcoin futures dropped below $50 billion—its lowest since March 2025—highlighting a phase of deleveraging across derivatives markets. Bloomberg reported that Bitcoin's recovery “rings hollow” as derivatives positions remain largely bearish.

Trump Reserve Speculation

Adding intrigue, speculation grew following remarks by CNBC host Jim Cramer, who claimed he “heard at $60,000 the President is gonna fill the Bitcoin Reserve.” The U.S. government currently holds about 328,372 BTC (valued at over $23 billion) according to Arkham data, though no new purchases have appeared in the Treasury’s wallets.

The reserve, created by executive order in March 2025, is funded only through seized assets. White House crypto advisor David Sacks previously clarified the administration “won’t bail out” Bitcoin and lacks the authority to mandate public purchases.

Broader Market Context

The rebound follows Bitcoin's steep 17% drop over five days—its worst week since late 2022. Prices remain down over 50% from the October 2025 record above $126,000. Despite this, research firm Bernstein keeps its 2026 target of $150,000, pointing to limited ETF outflows of just 5%, which signal strong institutional conviction.

For now, traders are watching whether real demand takes hold above $70,000 or if the short squeeze fades once forced buying ends.