Bitcoin Price Surge: Can BTC Break Through $112K?

A surge in Bitcoin prices above $112,000 could be on the horizon. This report explores how the upcoming release of economic data from the U.S. and the potential end of the government shutdown may positively influence BTC.

Key takeaways:

The resolution of the U.S. government shutdown might trigger a short squeeze, though skepticism remains among traders regarding its ability to maintain Bitcoin’s rise past $112,000.
Growing investor caution due to inflated AI valuations and disappointing consumer earnings is putting pressure on risk appetite, which may limit confidence in a Bitcoin rally.

Bitcoin (BTC) regained the $106,000 mark on Monday as the U.S. government shutdown showed signs of resolution. Analysts warned that a prolonged halt in government funding could hurt consumption further, especially after thousands of flight cancellations were reported. As the tech-driven Nasdaq Index rose by 1.5%, the cryptocurrency market followed suit.

Traders are now evaluating whether Bitcoin’s recent uptick can endure amid a lack of demand for bullish positions in BTC derivatives.

Bitcoin futures premium Bitcoin two-month annualized futures premium. Source: laevitas.ch

Currently, two-month BTC futures are trading at a 4% premium over spot markets—lower than the 5% level deemed neutral. The absence of interest in leveraged buy positions is likely tied to significant forced liquidations numbering $270 million that occurred on Tuesday and Wednesday as Bitcoin struggled to maintain support at $107,000. Buyers may require more reassurance that economic challenges are secondary before returning to the market.

The U.S. Federal Aviation Administration has reduced domestic operations, resulting in over 5,000 flight cancellations, according to Yahoo Finance. Many air traffic controllers, who have gone unpaid for nearly a month, are no longer reporting for duty. Despite a rare Sunday session in the U.S. Senate, uncertainties still loom regarding resolving the standoff. A breakthrough in the government shutdown could foster optimism among Bitcoin traders.

The U.S. Supreme Court has scrutinized President Donald Trump’s authority to impose certain tariffs. The ambiguity concerning both the ongoing government shutdown and the potential for additional import tariffs intensifies the landscape of risk.

Bitcoin Mirrors Broader Market Concerns Over U.S. Economic Weakness

Although immediate economic effects remain uncertain, the delay in spending has thus far bolstered the fiscal budget while increasing revenues. However, Bitcoin is not immune to widespread market fears regarding the fragility of the U.S. economy.

BTC options skew BTC 30-day options delta skew (put-call) at Deribit. Source: laevitas.ch

The BTC options skew (put-call) dropped to 6% on Monday, marking a transition toward a neutral-to-bearish market for the first time in November. Typically, when traders predict a substantial correction, this metric rises to 10% or higher, as put (sell) options trade at a premium. What might restore confidence for a potential rally to $120,000 remains unclear, signaling justifiable skepticism.

Unlike monthly BTC futures, perpetual contracts often stick closely to actual Bitcoin prices because of their adjustable funding rate. These contracts are largely favored by retail investors, making it essential to observe if sentiment has shifted positively following Bitcoin’s recent test of the $106,000 level.

Funding rates Bitcoin perpetual futures annualized funding rate. Source: laevitas.ch

In an ideal market, the funding rate would hover between 6% and 12% to reflect risk and opportunity costs. The present 5% rate raises concerns about the absence of retail interest even after Bitcoin rebounded from the $100,000 support on Friday. However, this lack of demand for bullish leverage shouldn’t be equated to an outright bearish outlook.

Concerns over inflated valuations in the AI space and diminishing consumer corporate earnings are causing investors to be more risk-averse. The eventual resolution of the government shutdown could alleviate market tensions and propel Bitcoin above $112,000, leading to a short squeeze. Yet, relying on a bullish breakout purely based on the government shutdown’s conclusion appears overly optimistic.

This content is for informational purposes only and not to be regarded as legal or investment guidance. The expressed views do not inherently represent those of Cointelegraph.