Bitcoin briefly regained the $78,000 level in a severe short squeeze, increasing its market capitalization by about $30 billion within an hour, but volatility quickly returned.
Bitcoin ($BTCIt soared to more than $78,000 on Tuesday, up about $1,400 in about an hour, as a wave of forced liquidations washed away overleveraged shorts and temporarily increased the asset’s market value by about $30 billion, according to trader Bull Theory. This move pushed Bitcoin back to the upper end of its recent range. It has fluctuated between about $75,000 and $80,000 since early May as traders debate whether the next leg is a clean breakout or another squeeze head fake.
Bitcoin rises in value, confusing traders
“Bitcoin has risen +$1,400 in one hour to over $78,000, adding to its $30 billion market cap,” Bull Theory wrote in the post, adding that “more than $25 million in short interest has been liquidated in the past hour.” While this liquidation size is small compared to the more than $140 million in forced flows seen during last month’s broader market contraction, concentrated in a one-hour window is enough to cause sudden and mechanical movements in a thin order book.
Breaking news: Bitcoin rises +$1,400 in 1 hour to over $78,000, increasing market cap by $30 billion.
More than $25 million in short sales were liquidated in the past hour. pic.twitter.com/fI1YnUUaeo
— Bull Theory (@Bull Theoryio) May 26, 2026
After a series of squeezes pushed Bitcoin up and down key resistance levels, including breaking above $80,000 in early May as ETF inflows and conference-driven hype collided at Consensus 2026 in Miami, the broader backdrop continues to be a rise in leverage but cooling. Bitcoin’s live price page shows the asset has a market cap of over $1.5 trillion and remains hovering near the high end of its recent range, underscoring Bitcoin’s outsized influence on the broader crypto complex.
Short squeeze mechanism and future price trends
On derivatives exchanges, similar episodes of forced buying have repeatedly driven Bitcoin higher as negative funding and crowded short positions turn into a series of liquidations that push up the price of the order book. The squeeze before this cycle wiped out hundreds of millions of dollars in bearish bets in a matter of hours. $BTC It broke above $76,000 and then $79,000 before stalling near the resistance band just below $80,600. Crypto.news has documented how these dynamics often cause spot demand to lag behind derivative-driven spikes, increasing the risk of price reversals once forced flows dry up.
Reactions to the move were predictably divided. One trader, Macropulse, pointed out that “for some reason it just went down right away lol”, capturing the frustration of those devastated by the 15-minute candle, which, as another user Alan Bolton put it, “everyone would quit”. Others warned that this is “not a good time to leverage. Most people will fail,” and argued that the squeeze could quickly reverse as late longs pile up and market makers slow the move.
Short squeeze psychology is not new to this cycle. A previous report from crypto.news highlighted how Bitcoin’s return to the $79,000 area in April coincided with rising open interest and negative funding rates suggesting “the possibility of another short squeeze,” with resistance near $85,000 and support near $77,000. Another summary detailing how to do it $BTC “We got $68,000 back during a short liquidation,” showing the same pattern of short sellers being forced to buy back.
As of this writing, crypto.news’ Bitcoin price page shows: $BTC Its market power is around 58%, its market capitalization is over $1.5 trillion, and it is holding steady just below its intraday high. This position, combined with our previous analysis that Bitcoin “stabilized at $70,000 as open interest declines,” setting the basis for the next move, suggests that aggressive shorting into the support zone may remain a risky strategy unless spot demand completely disappears.
For now, the latest $1,400 crash looks like a textbook reminder that in a market where the liquidation of tens of millions of dollars can increase the value of paper by $30 billion within an hour, the real question is not whether Bitcoin will soar above $78,000, but whether everyone should believe it will stay there once the forced buyers are gone.
