Bitcoin’s Path to $96,900: Could a $9.6 Billion Short Squeeze Spark a Major Rally?

Bitcoin is approaching a key resistance zone near $93,000-$97,000, where a $9.6 billion short squeeze could ignite a rapid price surge. Discover what’s driving this potential breakout and the challenges Bitcoin faces in December 2025.

Bitcoin is making headlines again as it eyes a critical price range between $93,000 and $97,000 that could trigger a massive short squeeze, potentially accelerating its recovery from recent losses. The world’s leading cryptocurrency traded near $87,000 recently after dipping below $84,000, marking one of its worst daily drops since March. Despite these setbacks, Bitcoin remains influential, with analysts watching closely for a breakout above $93,000 that could prompt forced buying and send prices much higher.

What is a Short Squeeze?

A short squeeze occurs when traders who bet against Bitcoin by shorting are forced to buy back their positions to limit losses as the price rises unexpectedly. This buying pressure fuels a rapid upward price movement, creating a feedback loop.

Bitcoin’s short positions cluster heavily just below $97,000.
A rally to $96,900 could trigger the liquidation of approximately $9.6 billion in shorts.
Past encounters with the $93,000 threshold have seen sharp price reactions, making this level a psychological and technical battleground for traders.

December Trading Challenges and Market Sentiment

Leveraged Liquidations Shake the Market

December has started turbulently for Bitcoin traders, with nearly $646 million in liquidations recorded in a single day, predominantly from long positions expecting price gains. This mass selling reflects rapidly shifting sentiment as Bitcoin’s price broke key support levels. The Crypto Fear and Greed Index currently sits in “Extreme Fear,” signaling widespread investor caution.

ETF Outflows and Corporate Pressure

Adding to the pressure, Bitcoin ETFs saw net outflows totaling nearly $3.8 billion in November, the largest since February, reducing liquidity and putting selling pressure on the market. Notably, some major corporate holders, including Strategy, have revised earnings forecasts downward due to Bitcoin’s underperformance.

Technical and Market Headwinds

Though the setup for a short squeeze is compelling, Bitcoin must first overcome several hurdles:

The $93,000 to $97,000 resistance zone remains a tough barrier due to waning enthusiasm in both crypto and tech sectors.
Negative funding rates in crypto derivatives markets indicate cautious investor sentiment.
Volatility spikes and ETF outflows challenge Bitcoin’s ability to sustain a rally.

Analysts note that while short-term holders capitulate, a successful breakout could catalyze a strong rebound, possibly pushing Bitcoin back toward its recent highs and beyond.

Key Takeaways for Traders and Investors

Watch the $93,000-$97,000 range: This is the critical zone where a short squeeze could ignite.
Market sentiment is fragile: With extreme fear dominating and significant liquidations ongoing, cautious trading is advised.
Liquidity constraints: ETF outflows and corporate sentiment shifts impact Bitcoin’s short-term price action.
Technical signals: Breaking and holding above resistance will be crucial for any sustained rally.