Bitcoin price prediction: BTC recovery faces EMA cluster after $320M liquidation event
Bitcoin price is trading near $86,500 in Thursday’s European session after a failed breakout above $90,000 triggered a two-way liquidation event that reshaped short-term market structure. The violent intraday move began during Wednesday’s session when the price surged $3,000 in under an hour from $87,000 to a 3-day high at $90,000. But the rally did not last. Price sharply reversed and fell to $85,300, wiping out intraday gains and triggering a heavier wave of long liquidations.
Highlights
- Bitcoin price swung from short squeeze to long liquidation, causing a cumulative $320 million liquidation
- BTC faces rejection risk near the $87,700 EMA cluster after a failed $90,000 breakout
- Spot demand failed to support the rally, exposing leverage-driven long positions to sharp reversal
There was no major macroeconomic or geopolitical news behind the spike. Instead, market data points to a classic short squeeze driven by leverage and thin liquidity. A large cluster of short positions had stop-losses stacked just above the $90,000 psychological level. Once the price pushed into that zone, those shorts were forced to close, generating more buy-side pressure. Roughly $120 million in short positions were liquidated during that burst, accelerating the move far beyond what normal spot demand could support.
Bitcoin price dynamics (Dec 2025). Source: Tradingview
At that point, the structure of the rally weakened. Momentum traders started chasing the breakout, opening new leveraged long positions. But the lack of spot follow-through left those new longs exposed. When the price reversed, it triggered a faster and deeper drop than the original rally, resulting in over $200 million in long liquidations. The swing from short squeeze to long liquidation showed how fragile the market had become.
Bitcoin outlook turns bearish unless price breaks above hourly EMAs at $87,700
Trader positioning data from Binance and OKX explains the velocity of the drop. On Binance, more top accounts shifted long ahead of the spike, but the average position size was low, reflecting weak conviction. On OKX, positioning ratios flipped aggressively after the rejection, suggesting that larger traders quickly adjusted exposure or hedged after spotting the false breakout.
Price eventually stabilized at $85,300, forming a tentative support zone. Since then, Bitcoin has been on a fragile recovery through Thursday Asian and into the European session. The current advance is now facing a technical barrier. The 1-hour 50 EMA sits near $87,000, while the 100 EMA is slightly higher, around $87,700. A clean break above both could validate a stronger recovery. But rejection at this cluster may open up a fresh decline targeting levels below $85,000, which was last seen on December 1.
In recent analysis, we discussed how Bitcoin dropped to $86,100 as EMAs rejected the bounce and open interest kept falling. The long-to-short ratio fell to 2.0, showing weak conviction behind Tuesday’s mild recovery.
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