Bitcoin Rally to $70K is possible despite $600M Liquidity Risk

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A small 4.3% rise in bitcoin's price to $69,600 could trigger more than $600 million in forced liquidations for bear traders.

Increasing network hashrate and BIP-360 quantum security proposals are helping to reduce long-term technical risks.

Bitcoin (BTC) has remained relatively stable in the $65,900 to $70,500 range over the past week. This slowdown encouraged bear traders, especially as other major asset classes showed resilience. However, while Bitcoin will take months to recover the $90,000 level, excessive bearish confidence will trigger a wave of forced liquidations in future positions, quickly shifting momentum to the bulls.

According to CoinGlass estimates, the price rally to $69,600 will force short BTC futures to over $600 million. For context, when Bitcoin rose from $60,200 to $70,560 on February 6, short liquidity totaled $385 million. The current only 4.3% move above the $66,700 level could cause more significant damage for those betting on further declines.

Bulls can be bullish on weakening macroeconomic data. The US reported slower gross domestic product growth for the fourth quarter of 2025, falling short of the 2.9% expected by analysts at Yahoo Finance's annual rate of 1.4%. This slower economic activity negatively affects corporate earnings outlooks, particularly reducing investors' appetite for stock market exposure.

Meanwhile, U.S. inflation rose more than expected in December, dimming hopes of an imminent interest rate cut. The price index for US personal consumption expenditures, excluding food and labor, rose 0.4% in the month. As the S&P 500 loses a significant amount of steam, investors may be forced out of their comfort zones to take big profits in onscene markets.

Escalating Middle East tensions could prompt investors to seek alternative hedges, especially after gold prices surged 25% in three months. Gold's market capitalization rose to $35.2 trillion, more than eight times that of NVDA US, which stood at $4.6 trillion.

With bitcoin trading 47 percent below its all-time high, the risk-reward profile for the cryptocurrency becomes more attractive to macro traders. For now, Bitcoin bears are in control as seen by the lack of demand for long positions in the futures market.

BTC Perpetual Futures funding volume has failed to stay above the 6% neutral threshold over the past two weeks. More telling is the recent negative funding volume, which suggests the bears are committed to their position as Bitcoin retests the $66,000 support level. In the year

Related: Bitcoin ETFs Pour $166M into BTC for Worst Start in Years

The recovery of hashrate and the development of BIP-360 will strengthen the security of the Bitcoin network.

While some of Bitcoin's recent weaknesses have been linked to network security concerns, those risks are now dissipating.

The seven-day average hashrate has recovered to 1,100 exhashes per second, which is similar to the end of January. Previous fears of miners leaving the network and heading to the artificial intelligence sector have been proven premature, as the industry has shown remarkable resilience.

Furthermore, the introduction of BIP-360 has addressed much of the uncertainty surrounding quantum computing concerns. This proposal outlines a backward-compatible soft fork for a post-quantum security framework. By avoiding the cost of the vulnerable key path found in Taproot, the proposal encrypts public keys in chains until the cost is spent.

This technology roadmap provides a clear path for the bulls to regain the narrative, potentially forcing a short squeeze that could send Bitcoin back above $70,000.