The toll of Bitcoin (BTC) has reached a new best high of $25,945 on Binance on Dec. 26 just a day afterwards it accomplished its previous record high on Christmas solar day.

BTC/USDT hourly candle chart (Binance). Source: TradingView.com

There are many broad reasons behind Bitcoin's rally, such as the high institutional demand for BTC. But for the current intraday rally, excessive shorting on Binance Futures was likely the primary catalyst.

$25,000 BTC now above stock-to-flow model cost

Before the upsurge, many traders were shorting Bitcoin beyond almost major futures exchanges. This somewhen led to a short squeeze every bit curt-sellers were selling and then close to the previous all-time high. As soon every bit the record-high bankrupt, BTC began to surge rapidly as Bitcoin price entered price discovery.

According to data from Bybt.com, more $131 one thousand thousand worth of Bitcoin futures contracts were liquidated in the final 24 hours. As long as the derivatives market place continues to see an increase in sellers, the probability of more short squeezes in the near future remains high.

What's more than, the current rally means that BTC is at present above the mean line of the popular stock-to-flow model, which forecasts a $100,000 target by December 2021.

What happens to Bitcoin next?

Meanwhile, traders and technical analysts generally remain overwhelmingly positive on Bitcoin's price trend. Popular trader Philip Swift, for case, noted that the number of big sellers has actually subsided during the electric current rally.

"Large players, >1000btc wallets, have calmed downward for 1st fourth dimension in this huge run-up," explained Swift. "We can see the number of >1000btc wallets decrease rapidly over the by calendar week or so. Whereas we tin can run into the 1-10 BTC wallets (mass retail) have continued to steadily climb in contempo weeks."

He added:

So quick topline assay suggests a lot of retail buyers are now coming in over the Christmas break. Potentially due to: a) hearing about BTC from fam/friends during the holidays now it is making new ATH's. b) plus some potential switching out of XRP/other alts.

Traders are besides increasingly cautious about shorting Bitcoin because it is all the same to attain a articulate peak. Until BTC peaks, the chances of a large curt squeeze that volition fuel the price rally even further in the brusk term remain high.

Moreover, Cointelegraph Markets annotator Michael van de Poppe said the adjacent impulse wave could run into Bitcoin exceed the $40,000 mark. He wrote:

"Bitcoin breaking upwards even more as it'due south budgeted my second Fibonacci point of interest around $25,800. The higher nosotros go, the college the adjacent impulse move will bring us. If $25,800 is this temporary top, next impulse could bring $BTC towards $40,000+."

Take notice of institutional demand

The next logical elevation for Bitcoin would likely be when the institutional buying of Bitcoin slows downward.

The most applied way to guess institutional sentiment is to evaluate the volume of the CME Bitcoin futures market and BTC inflows into Grayscale.

Until the two institutional investment vehicles see a noticeable turn down in demand and trading volume, the chances of a deep Bitcoin correction remain low.