Bitcoin Begins Independent Price Action: Rebound Underway or Trend Reversal?

Bitcoin has started to exhibit price action of its own following a recent rally from $57,742 to the currency level at $62,770.67. However, macroeconomic uncertainty, derivatives hedging and fresh geopolitical risks persist to keep recovery pressure on the market.

Fed Signals Ease Inflation Concerns

The rebound started when Fed Chair Kevin Warsh avoided announcing a rate cut, but said that the inflation outlook had eased slightly in recent weeks. He also reiterated the Fed's policy of sustaining the 2% inflation target.

The market focused more on the first half of the message. Traders started to ease back on hopes of further hikes after inflation concerns eased and US employment data weakened. For Bitcoin, this mattered because higher interest rate expectations usually reduce the valuation space for risk assets.

Rebound above $60,000 was not just a technical bounce but rather a genuine step up. Rates signaled a repricing of “rate-hike pressure” and unwinding of previous panic trades.

Liquidations Fuel the Bitcoin Rebound

According to CoinGlass, Bitcoin’s drop toward $57,700 triggered nearly $395 million in liquidations. This indicates the sell-off was not triggered by normal selling, but also by forced selling from leveraged sell positions.

Markets often rebound after forced liquidations subside.  Once macro news becomes less negative, short sellers begin to reduce risk. The short covering puts buying pressure and can speed up the buying trend.

Similarly, Bitcoin hit $62,000 when both Ethereum and Solana also recovered, causing $281 million worth of bearish liquidations. This indicates that spot demand was not the only factor affecting the recovery rate, but rather the derivatives positioning as well.

Options Market Still Signals Caution

While the rally is underway, traders are not yet convinced that a trend change is underway. Traders on Deribit purchased around $50 million in put options, and Bitcoin and Ethereum put/call skew remained negative, indicating demand for downside protection.

The derivatives market continues to buy insurance, but the spot market is rebounding. Traders who felt the trend had completely turned would probably see premiums declining more quickly. The broader trend is also looking fragile, with a ‘death cross’ on technical charts providing some caution.

Altcoins Join the Recovery

Bitcoin bounced back above $60,000, along with Ethereum, Solana, and Dogecoin. Capital is starting to move into the large-cap altcoins and Ethereum has surged by approximately 12% during the past week.

CoinMarketCap reported that the altcoin season index increased to its highest level in three months at 52. This is a sign of the increase in risk appetite, but it's not an official altcoin season.

Also Read: Bitcoin News Today: Strategy Sells $216M in BTC to Fund Dividends, Keeps Holdings

Technical Structure

On Wednesday, the US military executed strikes against Iran in retaliation for three ships struck by Tehran in the Strait of Hormuz. Brent crude oil price rose 3.26% to $76.58, following a 5% jump the previous day, while Bitcoin was losing ground.

Bitcoin trades below $63,000, reflecting a capped recovery below its 50-day Exponential Moving Average (EMA) at $65,581. The 200-day EMA at $75,459 sits well above the 50-day EMA, retaining a broader bearish bias. 

The Relative Strength Index (RSI) at 48 is moving flat near the midline while the Moving Average Convergence Divergence (MACD) holds above the signal line as the histograms contract, hinting at only residual buying interest.

Bitcoin should clear the 50-day EMA at $65,581 for a steady bullish recovery that could target the $70,000 threshold, followed by the 200-day EMA at $75,459.

FAQs:

1. Why did Bitcoin rebound from recent lows?

Bitcoin rebounded after inflation concerns eased and weak US employment data reduced expectations of further rate hikes. Short-covering after heavy liquidations also added buying pressure.

2. Is Bitcoin’s rebound a confirmed trend reversal?

Not yet. Bitcoin has recovered above $60,000, but it remains below the 50-day EMA at $65,581 and the 200-day EMA at $75,459, keeping the broader trend cautious.

3. What role did liquidations play in Bitcoin’s recovery?

According to CoinGlass, Bitcoin’s fall near $57,700 triggered nearly $395 million in liquidations. After forced selling, short-covering helped accelerate the rebound toward $62,000.

4. Why is the options market still cautious on Bitcoin?

Traders continue to buy downside protection through put options, showing that the derivatives market has not fully accepted the rebound. This suggests investors still fear another downside move.

5. What price level must Bitcoin clear for bullish momentum?

Bitcoin needs to break above the 50-day EMA near $65,581 to strengthen recovery momentum. Above that, the next key upside levels are $70,000 and the 200-day EMA near $75,459.