Bitcoin Breakout Above $96,000 Triggers $678 Million in Market Liquidations

On Tuesday, Bitcoin jumped significantly, reaching a two-month peak as traders exited bearish positions and moved their investments into other cryptocurrencies.

Key Takeaways

Bitcoin surged above $95,000, marking a pivotal point for market dynamics.
Approximately $591.16 million in short positions were liquidated as a result of Bitcoin’s breakout.
The rally prompted increased investment in altcoins, with Ethereum and other cryptocurrencies showing substantial gains.
Market sentiment is improving after a prolonged period of caution, suggesting renewed confidence among traders.
Attention now focuses on whether Bitcoin can sustain the new support level of $94,500 to maintain upward momentum.

Bitcoin

The upward trend gained traction when Bitcoin surpassed the $95,000 resistance level, a price point that had previously hindered multiple rallies in the past months. This breakout led many heavily leveraged traders to close their short positions, which further fueled Bitcoin’s rise and strengthened bullish sentiment.

Market Dynamics Shift with Bitcoin's Breakout

The significant move above $95,000 has transformed the short-term market structure for Bitcoin. This level has been a critical point of observation for traders, especially after prior attempts to surpass it were met with resistance.

Bitcoin faced rejections near $95,000 on several occasions, including December 3, December 10, and January 5. However, this time, robust buying pressure overcame the selling forces, leading to a decisive price increase.

As a result of this breakout, around $591.16 million in short positions were liquidated, indicating a strong correction in futures open interest. This reduction signifies a decline in leveraged positions and a transition towards demand from spot trading.

Crypto Liquidations Stats

Altcoin Gains Reflect Growing Confidence

The positive momentum quickly influenced the overall market. In the wake of Bitcoin's breakout, funds flowed into altcoins, leading to widespread increases after a bear cycle.

Ethereum saw a 6.52% increase over 24 hours, reaching $3,327. Other notable gains included Optimism (OP), which rose by 13%, while Celestia (TIA) and Pudgy Penguins (PENGU) each enjoyed approximately 10% growth.

DASH also made headlines as it surged to a multi-year high amid strong trading volume, reaching $59.74, representing a 33% rise in just 24 hours. This altcoin surge resulted in Bitcoin's dominance dropping from 59.3% on December 24 to 58%, showing that traders are diversifying beyond Bitcoin.

Market Sentiment Shifts After Extended Weakness

This rally comes on the heels of months marked by cautious approaches within the crypto market. Bitcoin has recently been perceived as lacking substantial bullish drivers entering 2026.

A significant market shakeout in October 2025, resulting in $19 billion in liquidations, contributed to the market being heavily oversold. Many investors chose to reduce their crypto holdings in favor of assets like gold, silver, and AI stocks during this downturn.

Throughout this period, the crypto fear and greed index consistently dipped into the “extreme fear” zone, a situation that historically precedes market stabilization and recoveries.

Attention Turns to Key Support Levels

As momentum continues to build, focus is now directed towards whether Bitcoin can establish $94,500 as a new support level. Successfully holding this level could pave the way for a potential rise toward $99,000, which previously served as support from June to November and may now act as resistance.

Alternatively, if Bitcoin fails to keep above $94,500, it could retreat back into its earlier range of $85,000 to $94,500. Thus, short-term price movements around this level are crucial for determining the market's near-term direction.

Disclaimer: This content is intended for informational purposes only and should not be construed as financial advice. The views expressed in this article may represent the author's opinions and do not reflect the views of The Crypto Basic. Readers are encouraged to conduct comprehensive research before making any investment decisions. The Crypto Basic is not liable for any financial losses.