Bitcoin’s Rally Beyond $73K Fueled by Spot Demand, Not Just Short Squeeze: Nansen

Bitcoin’s recent move above $73,000 is being driven by more than just a short squeeze, according to blockchain analytics firm Nansen. While short covering has accelerated the advance, spot and exchange-traded fund (ETF) demand are providing the underlying support, said Nicolai Sondergaard, a research analyst at Nansen.

Understanding the Rally: Short Squeeze vs. Spot Demand

Short squeezes occur when a rapid price increase forces traders who bet against the asset to buy back positions, amplifying upward momentum. However, Sondergaard emphasized that this mechanism did not create the rally. Instead, it compounded buying pressure that was already building from spot purchases and ETF inflows.

Data from Nansen indicates that spot buying has been strengthening, with ETF demand also contributing significantly. This distinction is critical for traders assessing the sustainability of the move. A rally driven purely by short covering can fizzle quickly once the squeeze is exhausted, but demand from actual buyers suggests more durable support.

Key Support Levels to Watch

With most of the short squeeze now largely complete, the continuation of the uptrend depends on sustained spot buying, according to Sondergaard. He identified $70,000 as a critical support level. If Bitcoin holds above this threshold, positive momentum could persist. Conversely, a pullback to the $69,000–$69,700 range would still be considered a normal retest of the breakout zone, rather than a bearish reversal.