Bitcoin Surges Amid Leverage-Driven Price Action – Will It Last?

Bitcoin is now trading above the $85,000 mark following an impressive rally that began on Wednesday after US President Donald Trump announced a 90-day pause on reciprocal tariffs for all countries except China. The announcement injected a wave of optimism across financial markets, helping to ease investor fears and ignite fresh momentum in the crypto space. Since then, BTC has surged more than 15%, marking one of its strongest short-term recoveries in recent weeks.

Market sentiment has shifted quickly as buyers step back in, and Bitcoin’s strength above key technical levels suggests growing confidence among traders. However, beneath the surface, there are signs that caution is warranted. According to new insights from CryptoQuant, this rally appears to be driven in large part by leverage. Analysts warn that a leverage-driven pump is underway, not just in Bitcoin, but also across major altcoins, which could introduce heightened volatility in the coming sessions.

While the recent bounce has revived bullish hopes, the reliance on leveraged positions could leave the market vulnerable to sharp reversals. Whether this momentum can be sustained or leads to another round of liquidations remains the key question in the days ahead.

Bitcoin Faces Critical Test Amid Leverage-Driven Rally

Bitcoin is now facing a critical test as bulls attempt to reclaim the $90,000 level, a key threshold that could confirm a recovery rally and signal the end of the recent downtrend. After weeks of relentless selling pressure and macroeconomic uncertainty, Bitcoin has bounced strongly from sub-$75K levels, now trading just above $85K. Yet despite this impressive rebound, the broader market remains on edge.

Global tensions, particularly those surrounding US trade policy and the risk of a broader economic slowdown, continue to inject volatility into financial markets. Bitcoin, often seen as a high-risk asset, remains 22% down from its all-time highs as it attempts to rebuild momentum. While bulls are showing signs of strength, concerns are mounting that the recent surge may not be entirely organic.

Top analyst Maartunn shared on X that this latest move appears to be a leverage-driven pump. His data shows a significant uptick in Bitcoin’s Open Interest alongside the price surge — a signal that leveraged positions are fueling the rally. According to Maartun, this behavior is not isolated to Bitcoin. Ethereum (ETH) and Ripple (XRP) are also showing similar leverage-driven characteristics.

This trend introduces the risk of sharp corrections if positions are unwound suddenly. With funding rates and open interest climbing across major assets, the next few days will be crucial. If bulls can push BTC above $90K and sustain momentum, the recovery may continue. But failure to break this resistance — combined with excessive leverage — could lead to another round of long liquidations and renewed selling pressure.

Testing Key Technical Levels Amid Recovery Attempt

Bitcoin is currently trading at $84,900 as bulls test a major technical milestone: the 200-day Exponential Moving Average (EMA). Just above lies the 200-day Simple Moving Average (SMA) near $87,300, placing BTC less than 3% away from breaking through both critical resistance zones. These indicators often serve as long-term trend signals, and reclaiming them would strengthen the case for a full recovery rally.

If bulls manage to push the price above the recent local high at $88,800, it could confirm a short-term trend reversal and open the path toward $94K and beyond. Momentum is building following a 15% surge over the past few days, supported in part by macroeconomic relief, including a 90-day pause on US tariffs.

However, risks remain. Failing to hold the $82K support level would be a bearish signal, likely triggering increased selling pressure. A decisive move below $82K could drag BTC back under $80K, erasing recent gains and placing bulls on the defensive once again. With volatility still elevated and market sentiment mixed, the coming days will be crucial in determining whether BTC can sustain this upward momentum or face renewed downside.

Featured image from Dall-E, chart from TradingView