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Finance

Bitcoin’s $110,000 Test: Will Macro Fears Trigger a Short Squeeze Rally?

Bitcoin may retest $110,000 due to strong U.S. jobs data. A market correction occurs with potential for a short squeeze.

byAndres Castro

September 25, 2025, 5:21 PM

Executive Summary

Bitcoin is facing an “imminent” retest of the $110,000 level due to strong U.S. jobs data boosting the U.S. dollar and diminishing optimism for Federal Reserve interest rate cuts.

The market downturn is part of a broader correction affecting cryptocurrencies, stocks, and gold, driven by macro factors including U.S. economic data and geopolitical tensions.

Despite current bearish sentiment, significant short interest across various cryptocurrencies suggests a potential “short squeeze” could draw prices higher.

The Story So Far

The current downturn in Bitcoin and the broader market is primarily driven by strong U.S. jobs data, which has diminished optimism for Federal Reserve interest rate cuts and subsequently propelled the U.S. dollar to a three-week high. This macroeconomic pressure, combined with ongoing geopolitical tensions from the Russia-Ukraine conflict, is contributing to a wider market correction after a period of record highs for traditional assets.

Why This Matters

Bitcoin’s struggle to maintain its value, facing an imminent retest of the $110,000 support, is a direct consequence of stronger-than-expected U.S. jobs data which dampens Federal Reserve interest rate cut hopes and strengthens the U.S. dollar, indicating increased macroeconomic headwinds for risk assets. This downturn reflects a broader market correction impacting stocks and gold, suggesting widespread investor caution. However, significant short interest across cryptocurrencies could also set the stage for a potential short squeeze, offering a glimmer of hope for a rapid price rebound despite the current bearish sentiment.

Who Thinks What?

Market analysts like Swissblock believe Bitcoin is in a delicate balance, facing an “imminent” retest of $110,000, and needs to reclaim $115,200 for upward momentum, with a risk of falling to $100,000 if $110,000 support is lost.

The Kobeissi Letter views the broader market correction in stocks and gold as “overdue,” considering it a natural and healthy rebalancing for bull markets that do not move in a straight line.

Some bullish takes suggest that despite current bearish sentiment, high short interest across various cryptocurrencies, including Bitcoin, makes a “squeeze” higher increasingly probable as accumulated liquidations could act as a price magnet.

Bitcoin (BTC) is facing an “imminent” retest of the $110,000 level after strong U.S. jobs data propelled the U.S. dollar to a three-week high, contributing to a broader market correction across cryptocurrencies, stocks, and gold. The leading cryptocurrency fell to new local lows of $110,658 on Bitstamp, driven by reduced confidence in Federal Reserve interest rate cuts and ongoing geopolitical tensions.

Market Downturn and Macro Factors

The latest U.S. jobless claims data, which came in below market expectations, significantly impacted investor sentiment. This data diminished optimism for upcoming interest-rate cuts by the Federal Reserve, leading to a surge in U.S. dollar strength.

The U.S. Dollar Index (DXY) climbed to a three-week high, while Bitcoin, along with traditional assets like stocks and gold, experienced declines. Adding to the negative market mood is the continued uncertainty surrounding the Russia-Ukraine conflict.

Analyst Perspectives on Bitcoin Price Action

Market analysts are closely watching Bitcoin’s price movements. Swissblock warned that the market is in a “delicate balance” as Bitcoin slipped below $113,000 and currently hovers under $112,000.

According to Swissblock, a retest of the $110,000 mark appears imminent. To regain upward momentum, BTC/USD needs to reclaim the $115,200 level to have a chance at revisiting the top of its trading range.

Conversely, losing the $110,000 support could open the path toward the significant $100,000 psychological mark. Swissblock also noted that $110,000 represents “max pain,” likely to be touched and potentially render Friday’s options worthless, referencing an upcoming $17.5 billion options expiry event.

Broader Market Correction

The correction isn’t limited to Bitcoin. The Kobeissi Letter described the pullback in stocks as “overdue,” emphasizing that healthy bull markets do not move in a straight line. Prior to this correction, both stocks and gold had been setting record highs, suggesting a natural market rebalancing.

Potential for a Short Squeeze

Despite the current bearish sentiment, some bullish takes on the crypto market focus on topside exchange order-book liquidity. With markets heavily short, the potential for a “squeeze” higher is considered increasingly probable.

Data indicates high short interest across various cryptocurrencies, with $AVAX short-side liquidations at 96.2% of pending liquidations, $ETH at 78.3%, and $BTC at 69.4%. This accumulation of liquidations is seen by some as a magnet for price, potentially drawing it higher as smart money takes advantage.

Key Takeaways

Bitcoin faces immediate downside pressure towards $110,000 due to U.S. macro data and geopolitical concerns. While a broader market correction is underway, significant short interest in crypto markets could pave the way for a potential short squeeze, offering a glimmer of bullish hope amidst the current downturn.