I. Market Review: This Is Not an Ordinary Rebound

From August 19 to 20, Bitcoin violently surged from around $64,000 to the $69,500-$71,000 range, with its 24-hour gain briefly exceeding 8%, marking a new high since June. ETH was even more explosive, soaring from around $1,900 to $2,250-$2,300, a gain of as much as 18-19%.
The driving force behind this rally was not an improvement in fundamentals, but an epic short squeeze. Coinglass data shows that over $1 billion in Bitcoin short positions were forcibly liquidated in just one hour, while total network liquidations exceeded $1.4 billion over 24 hours, with short positions accounting for over 90%. Forced buying from short covering further pushed prices higher, creating a typical “short-squeeze spiral.”
At the macro level, the U.S. Treasury announced that the scale of long-term Treasury buybacks would at least double, causing long-term yields to retreat; Trump met with crypto industry executives; and the SEC plans to relax registration exemptions for certain tokens. The combination of these three positive catalysts ignited the short-squeeze rally.
II. Technical Analysis: Severely Overbought, With Correction Pressure Building
BTC has broken above the 200-day moving average, after previously trading below it for 270 days. Its 4-hour RSI is as high as 88.19, placing it in severely overbought territory; ETH’s daily RSI is around 82.2, also entering overheated territory. Both have tested or broken above the upper Bollinger Band.
However, structural concerns remain: the Coinbase Premium Index is still negative, indicating that demand in the U.S. spot market has not truly returned—the current rally is mainly leverage-driven rather than fueled by spot buying. Glassnode on-chain data remains in the “capitulation phase,” and until the realized profit/loss ratio metric breaks above 2, any rebound should be viewed as a local rebound.
III. My Trading Plan: Wait for a Pullback, Do Not Chase the Rally
BTC Strategy (Wait for a Pullback)
The current price is fluctuating around $69,500-$70k. I will not chase the rally at the current level—$70k is a key psychological round-number threshold and the focal point of the battle between bulls and bears.
· Entry conditions: Wait for the price to pull back to the $68,000-$68,500 range and show signs of consolidation on declining volume, such as a hammer or doji on the 4-hour chart, before considering building a position in batches. If the price pulls back to the $67,000-$67,500 support zone and rebounds on increased volume, this is also a secondary area worth watching.
· Alternative scenario: If BTC breaks through $71,500-$72,000 on increased volume without a pullback and holds above that level, I may follow the trend with a small position, but position size will be limited to half the usual amount.
· Take profit: First target of $73,000-$74,000, reducing the position by 50%; the remaining position will target $75,000-$76,000, with whether to fully exit determined by trend strength.
· Stop-loss: If the price falls below $66,500 after entry, outside the previous-low support, exit unconditionally.
ETH Strategy (Wait for Confirmation)
ETH has clearly outperformed BTC in this rally, and ETH/BTC momentum is improving. However, $2,300 is a key test—only a sustained breakout followed by a successful retest will establish a genuine recovery structure.
· Entry conditions: If the price pulls back to the $2,200-$2,250 range and shows clear buying support, such as a volume-backed stabilization, build a position in batches; if it directly breaks above $2,340 and holds, enter with a small position.
· Take profit: First target of $2,400-$2,450; second target of $2,500-$2,550, taking profits in batches.
· Stop-loss: Exit if the price falls below $2,050, the lower boundary of the breakout range.
Regarding shorting: I will not short against the trend. During a strong rally, short liquidations themselves may continue to generate upward momentum. I will only consider a short-term reversal after a clear signal appears—such as the price failing to advance on heavy volume at a key resistance level and then breaking below support.
The essence of this rally is a “leverage-driven short-squeeze rebound,” not a fundamental reversal. $70,000 is the first touchstone for testing its strength. My strategy is: do not chase the rally, wait for a pullback, and maintain discipline. What is truly scarce is not buying opportunities, but having enough principal left in the account to continue waiting for the next opportunity.
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