Bitcoin (CRYPTO: BTC) climbed nearly 7% Thursday to approximately $72,500 after a $500 million short squeeze helped fuel its strongest volatility-adjusted breakout since October 2023.

According to Glassnode co-founder Rafael Schultze-Kraft, similar breakouts have historically preceded gains of nearly 85% over six months, though prediction markets suggest traders remain cautious.

The $500 Million Squeeze Behind Bitcoin’s Breakout

Analytics firm Glassnode said roughly $500 million worth of short positions were liquidated within minutes as Bitcoin pushed above $69,000 Wednesday.

When exchanges automatically closed those bearish positions, traders were forced to buy Bitcoin, accelerating the rally. Glassnode said its liquidation heatmaps had shown the pressure building for up to 10 days beforehand.

The move followed the Treasury’s announcement that it would expand long-term bond buybacks, which briefly pushed yields lower and lifted risk assets.

Strategy Inc. (NASDAQ:MSTR) and Coinbase Global Inc. (NASDAQ:COIN) also climbed.

Why Glassnode Says This Breakout Is Different

Glassnode said the move measured 5.8 times Bitcoin’s typical daily volatility over the preceding month, making it the strongest such advance since October 2023.

Such moves are rare. Schultze-Kraft said Bitcoin has recorded just 14 upside moves exceeding five sigma since 2013. Six previous cases emerged from similarly subdued volatility.

Those six precedents delivered median returns of 11.8% after one month and 84.8% after six months. From approximately $72,500, a repeat of the six-month median would put Bitcoin near $134,000.

The comparison draws on just six previous cases, limiting its predictive value. The last breakout of this magnitude came in October 2023, before spot Bitcoin ETFs helped fuel a major rally.

Why $75,800 Is the Crucial Test

In a report published shortly before the rally, Glassnode flagged two on-chain reference levels: roughly $68,500, the approximate cost basis of recent buyers, and roughly $75,800, the cost basis of the broader active investor base.

Bitcoin has reclaimed the first but not the second. Recovering $75,800 would offer stronger evidence that conditions are improving, though it would not guarantee a sustained advance.

Glassnode had also warned of weak U.S. spot demand, leaving the durability of the move uncertain.

What Prediction Markets Say About Bitcoin’s Next Move

A Kalshi market tracking how high Bitcoin trades in August prices a 59% chance it touches $75,000 before month-end, 33% for $77,500 and 20% for $80,000.

An 85% rally would put Bitcoin above $134,000. First, it may need to show that buyers, rather than forced liquidations, can push it through $75,800.

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