Crypto News: Bitcoin Hits Two-Month High Rose Briefly Above $96,000 as Altcoins Surge and Short Squeeze Unfolds

Bitcoin climbed to a two-month high of $96,240 on Tuesday, breaking decisively above a long-watched resistance zone and triggering more than $500 million in liquidations, as traders rushed to cover bearish positions and capital rotated aggressively into altcoins.The breakout marked bitcoin’s first sustained move above $94,500 since November, a level that had capped upside on three prior attempts — Dec. 3, Dec. 10, and Jan. 5 — making the move technically significant for short-term market structure.Bitcoin breaks $94,500 as derivatives unwindAccording to derivatives data, over $500 million in futures positions were liquidated within four hours of the breakout, signaling a classic short-covering squeeze rather than a leverage-driven long buildup.Bitcoin futures open interest fell to $30.6 billion, down from $31.5 billion earlier in the dayThe decline in open interest alongside rising price suggests shorts were forced out, while spot demand absorbed selling pressureAnalysts say this dynamic is often healthier than leverage-led rallies, as it reflects real positioning resets rather than speculative excess.Altcoins outperform as risk appetite returnsAltcoins led the rally, confirming a broader risk-on rotation across crypto markets.Privacy coin Dash (DASH) surged to its highest level since 2021 on heavy volume, appearing to front-run the broader breakout and signaling renewed speculative appetite.Other notable movers over 24 hours included:Optimism (OP): +18.5%Celestia (TIA): +14%Pudgy Penguins (PENGU): +14%As altcoins outpaced bitcoin, BTC dominance slipped to 58.6%, down from 59.3% on Dec. 24, reflecting capital rotation away from large-caps and into higher-beta tokens.CoinDesk 80 Index (CD80): +8% YTDCoinDesk 20 Index (CD20): +6.35% YTDWhy crypto is rallying nowThe move comes despite a lack of obvious near-term bullish catalysts, suggesting the rally is driven more by positioning, sentiment, and market structure than fresh macro news.Several factors appear to be converging:The October $19 billion liquidation cascade left bitcoin and many altcoins deeply oversoldProlonged risk aversion pushed traders into gold, silver, and AI equities, draining crypto liquidityThe Crypto Fear & Greed Index repeatedly dipped into “extreme fear”, historically associated with local bottomsAs sentiment stabilized, even modest spot demand was enough to push prices higher and force short liquidations.Key levels to watchFrom a technical perspective, analysts say the next phase hinges on whether bitcoin can hold $94,500 as support.Above $94,500: Path opens toward $99,000, a major supply zone that previously acted as support between June and NovemberBelow $94,500: Risk of consolidation or pullback into the $85,000–$94,500 rangeIn the near term, traders expect a retest of $94,500 to determine whether the breakout converts into a sustained trend or fades into another range-bound phase.Bottom lineBitcoin’s move above $96,000 marks its strongest upside break of 2026 so far, driven by short covering, improving sentiment, and renewed appetite for risk. Altcoins have taken the lead, suggesting traders are no longer positioned defensively.Whether the rally extends toward $99,000 — or stalls on a failed retest — will depend on follow-through in spot demand and the market’s ability to hold newly reclaimed technical levels.