Driven by short liquidation, Bitcoin broke through $66,000 this morning, testing the previous high at the end of September. At the same time, DeFi liquidation volume hit the second highest in three months, and signs such as stablecoins flowing into exchanges released bullish signals. However, there are still a large number of sell orders piled up above the September high, and Bitcoin has not yet clearly broken through the downward trend. It is expected that market volatility will continue and may face downward pressure.

At 6 am today, Bitcoin once again broke through $66,000, reaching a high of $66,500, testing the previous high at the end of September. After briefly breaking through the trend line of the descending channel, the market is closely watching whether it can continue to rise and break through the resistance level, or will adjust again.

A large number of liquidations boosted

This time, Bitcoin rose 6.9% in 8 hours, and a major boost was the liquidation of short positions. The Dynamic Zone reported yesterday that if Bitcoin breaks through $65,000, mainstream centralized exchanges will liquidate short positions worth $396 million, and according to Coinglass data, the crypto market has liquidated more than $240 million in the past 24 hours, of which short positions accounted for $208 million, which is also reflected in the surge in funding rates.

Additionally, during this rally, Bitcoin’s DeFi liquidations hit their second-highest volume in more than three months, according to data from Santiment. This is noteworthy because the last time such a large number of liquidations occurred, Bitcoin was on a 20-day, +29% price rally. If history repeats itself, this could be a strong bullish signal that further price gains are imminent.

Market sentiment improves

As Bitcoin temporarily soared above $66,000, Santiment posted in the early hours of this morning that investors are looking for opportunities in the GameFi and memecoin sectors. They believe that historically, this is a sign that market sentiment is improving.

In this context, many traders are betting on the possibility of Bitcoin breaking through the $70,000 mark. JJ, head of crypto options and derivatives at HighStrike, said:

As BTC breaks above the 200-day moving average, there is renewed interest from the buy side of the options market. Kelly Greer of Galaxy Digital mentioned that the most popular of these options are the 75K-100K strike price calls for the fourth quarter of this year.

Increase in stablecoins on exchanges

There are also positive signs in the stablecoin flow of exchanges. Santiment wrote that the USDT inflow of exchanges has slightly rebounded, and the inflow of stablecoins into exchanges is usually an important driving force for the continued rebound of the market. It is recommended to continue to observe whether this trend continues.

Resistance remains

Looking ahead to Bitcoin, JJ warned that resistance above the September highs remains as a large number of sell orders are piled up on the Coinbase order book. He further noted:

Although the fourth quarter market showed signs of breaking out to new highs, as long as these sell order walls remain in place, investors should still expect the market to remain range-bound and potentially see downward liquidity sweeps.

In addition, Bitcoin's performance in the fourth quarter is also expected to be affected by overall economic factors such as the U.S. presidential election and the Federal Reserve's interest rate cuts, and deserves continued attention.