Short Squeeze Ignites Crypto Rally: Bitcoin Nears $95K as Markets Position for Fed Rate Cut

A crowded trade finally snapped. Into Tuesday’s Fed week calm, a swift short squeeze propelled Bitcoin toward $95,000—its highest level since mid‑November—as leveraged bears were forced to cover. That reflexive unwind, not a new macro datapoint, was the catalyst.

Here’s the state of play: - Bitcoin traded above $94,400 after hovering near $90,000 earlier in the day, up 5% over 24 hours and about 4% on the week. - Altcoins outpaced BTC: Ethereum rallied 8% to $3,359, extending its weekly gain to over 16%—the biggest move among the top 10. XRP added ~5% to $2.17, Solana rose 6% to $144, and Dogecoin climbed 6% to $0.15. - Liquidations over the past day hit $376 million, per CoinGlass, with shorts accounting for $297 million. Bitcoin led with roughly $153 million in wiped positions, followed by Ethereum at $110 million.

The timing matters. The FOMC began its meeting Tuesday, with a third rate cut this year widely expected when it concludes Wednesday. CME FedWatch shows nearly a 90% probability of a 25 bps reduction. Crypto tends to find air under lower-rate regimes, but today’s pop looks like classic “buy the rumor.” If that’s right, “sell the news” risk is live into and after the decision.

The under-discussed driver is positioning. Recent major liquidation days had skewed toward longs getting clipped on drawdowns, which nudged traders to lean the other way. That created a fragile setup: thin order books into a binary macro catalyst, elevated short exposure, and an incentive for larger players to run stops. Once price cleared key levels, auto-deleveraging and forced buys did the rest. Altcoins, with higher beta and less depth, amplified the move.

On sentiment, prediction markets are leaning optimistic. Myriad, a platform operated by Dastan, shows rising conviction that Bitcoin revisits $100,000 before it breaks down to $69,000—the odds sit near 80% and climbed 9% over the last day. That’s useful as a tape-reading gauge, but it can become procyclical: as price rips, confidence chases, leverage creeps higher, and the market becomes increasingly sensitive to any policy surprise.

The trade-off from here is straightforward. If the Fed delivers the expected 25 bps cut and sticks to a measured tone, momentum can carry—especially with shorts already dented. If guidance tightens or growth risks dominate the presser, you’ll hear the air come out of this move quickly. Either way, today was not a broad-based demand renaissance; it was a positioning reset. Respect it, but don’t mistake it for a structural shift without confirmation in spot flows and sustained breadth.