Bitcoin has staged a dramatic comeback, shattering the critical $120,000 resistance level to reach a height last seen in mid-August. This five-day climb signifies that traders are now overwhelmingly positioning for a strong, bullish finish to the year, seemingly unfazed by political turmoil in Washington.
The rally is underpinned by two key drivers: renewed macroeconomic hope and an explosive internal market dynamic.
Market conviction is evident in the derivatives market, where open interest in BTC futures has hit a record $32.6 billion. This massive influx of capital shows traders are placing significant bets on further price increases.
Crucially, this bullish activity coincides with a piling up of short positions, a scenario analyst Skew notes creates the "perfect conditions" for a short squeeze. Such an event would force short-sellers to rapidly buy back their positions as the price rises, causing a violent upward price acceleration and adding substantial fuel to the rally.
Ironically, the ongoing U.S. government shutdown is being viewed by many traders not as a crisis, but as a catalyst for risk assets like Bitcoin. The resulting economic uncertainty, which Treasury Secretary Scott Bessent warned could "hit to the GDP," is expected to benefit the market.
Furthermore, with the government unable to release a fresh jobs report, the economic picture is murky enough to make an interest rate cut by the Federal Reserve at the end of the month almost a certainty, further encouraging the bullish sentiment.
The relentless strength of the advance is winning over prior skeptics. Paul Howard, a senior director at Wincent, has changed his bearish outlook, noting that with BTC back at mid-July levels, the total market cap is once again above $4 trillion.
Howard now believes the market is set to sustain its rally above $120,000 in the coming weeks, especially with a technical "floor" being established around the $110,000 mark. The quiet trading days are officially over, and the market battle for the next major price leg has begun.
October 2025, Cryptoniteuae