Bitcoin staged a genuine rally on Monday, rapidly breaking above $87,000 and peaking at $87,381 during the U.S. session — the highest level since late January. Although the coin corrected to about $85,500 at the start of Asian trading on Tuesday, the surge completed a 13% advance over four days and pushed total crypto market capitalization back above the symbolic $3 trillion mark — for the first time this year. But what underlies this bullish triumph: real fundamentals or merely technical inevitability?

The immediate fuel for the rocket was a massive wave of forced liquidations. According to Coinglass data cited by CoinDesk, more than $1 billion of leveraged crypto positions were wiped out in 24 hours.

Bears took the brunt: about 82% of liquidated volume (roughly $840 million) came from short sellers. Some 135,000 traders were forced to lock in losses. The most painful hit was a nearly $21 million Bitcoin liquidation on the Hyperliquid platform.

"It looks like mechanics did it rather than conviction. Bitcoin pierced the upper boundary of its September range and entered a dense zone of short-liquidation levels, and forced buying finished the rest," notes Rachel Lucas, an analyst at BTC Markets.

She adds that $84,000 has now become a critical support level. It will show "whether this is a genuine trend reversal or just a short squeeze." However, blaming everything on a mechanical squeeze would be a mistake. The market also caught a powerful macroeconomic and regulatory tailwind:

Institutional Hunger

Spot Bitcoin ETFs in the U.S. drew about $1 billion on Monday — the largest single-day inflow since October.

Deregulation by the SEC

Last Thursday, the regulator granted a five-year exemption allowing trading of tokenized U.S. equities on blockchain platforms. That sparked euphoria among crypto-related companies: Coinbase shares rose 3.5%, and MicroStrategy gained 9.5%.

Geopolitics and Oil

WTI fell more than 2%, dipping below $90/bbl on news that Iran may be willing to reopen the Strait of Hormuz. Cheaper oil reduced inflation fears and reignited risk appetite.

Wall Street Triumph

The Nasdaq Composite closed Monday at a record high.

Corporate Purchases

MicroStrategy resumed Bitcoin buying for the first time in three weeks, acquiring 950 BTC for $75.7 million. Their treasury now holds a colossal 846,000 BTC.

The rally lifted the entire market. Ethereum neared a 10-month high at $2,800, XRP gained over 9%, Dogecoin jumped 15%, and meme-coin PEPE led the pack with a 22% rise. The Fear & Greed Index moved into "Extreme Greed."

Open interest in perpetual futures swelled to nearly $160 billion (a peak since late October), despite the short-covering purge. New leveraged positions are actively replacing the old ones.

Experts warn the market is walking a tightrope. Caleb Lin, senior trader at QCP Group, notes that when "leverage outpaces spot prices," even a small pullback can trigger a cascade of liquidations in the opposite direction.

Despite the euphoria, Bitcoin remains far below its all-time high of $126,000 set in October last year. Several analysts urge calm.

"Risk is that this is macro-liquidity trading dressed up as crypto. If so, the slightest wobble in risk assets will put significant pressure on Bitcoin," warns Rich Rosenblum, co-founder of crypto market-maker GSR. Blockchain analytics firm Santiment echoes the concern, recording that optimistic social-media commentary has reached its highest level since 2024.