Bitcoin Hits $117k: Is It Driven by Short Covering or Long Position Liquidations?

Source: [1] ChainCatcher [2] Blockchain.News [3] BitPinas

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Data from derivatives markets reveals that Bitcoin's potential advance towards $117,000 could set off a large-scale short squeeze on top centralized exchanges. Coinglass figures show that if

surpasses this price point, the total value of short liquidations across exchanges may reach as much as $594 million. This highlights a significant concentration of leveraged positions at this level, where a strong upward push may force short sellers to close out, which could further accelerate price gains. On the flip side, if prices fall below $114,000, long positions could face liquidations totaling $656 million, reflecting the intense volatility present in the derivatives sector.

The risk of liquidations is heightened by historically high levels of open interest and leverage. As of late September 2025, the overall open interest in crypto futures exceeded $220 billion, with Bitcoin perpetual contracts trading at volumes 8 to 10 times greater than spot trades. Experts caution that the heavy use of leverage around $117,000 creates a liquidity trap, making sharp price swings at these levels more likely to trigger a chain reaction of forced liquidations. For example, a decline to $104,500 could wipe out over $10 billion from long positions, while a surge to $124,000 might see $5.5 billion in shorts liquidated.

Market trends point to a possible short squeeze. In June 2025, data showed $9 billion in Bitcoin shorts under threat of liquidation at the $117,000 mark. By September, this number appeared to stabilize as institutional interest increased and favorable macro conditions—such as pro-crypto policies from the Trump administration and ETF inflows—strengthened Bitcoin’s outlook. On-chain data also indicates a reduction in retail selling, while institutional accumulation and positive macro trends (including ETF inflows and tariff changes) continue to underpin a bullish long-term narrative.

Traders should keep a close watch on price action near the $117,000 level, where liquidity pockets could spark rapid volatility. Currently, short sellers make up the bulk of leveraged positions (94.69% of recent 4-hour liquidations), but a strong price breakout could quickly flip this trend and put long positions at greater risk. The relationship between derivatives and spot markets remains a key driver, as liquidations of leveraged positions often lead to swift price corrections. Analysts recommend managing position sizes carefully and monitoring

and open interest statistics to identify potential turning points.

Regulatory developments are also shaping market activity. The GENIUS Act in the U.S. and the MiCA regulations in the EU have brought more consistency to stablecoin rules, limiting opportunities for regulatory loopholes. However, ongoing differences in CBDC approaches and market frameworks could prolong periods of volatility. For now, whether Bitcoin can achieve and sustain $117,000 will depend on continued institutional investment and a stable macro environment, with derivatives market data providing critical insight into broader market risks.

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