Bitcoin has made a remarkable recovery, rebounding from a dramatic decline last week. After dipping to a low of $62,822 on Friday, the leading cryptocurrency is now trading around $70,400, representing a 12% gain in just a few days.
As Bitcoin reached a high of $70,998 during early Asian trading on Monday, investor sentiment appears to be improving. This optimism is further substantiated by the Coinbase Premium index, which tracks the price difference between Coinbase and Binance. The index saw a significant increase of over 70%, moving from -0.23% on Friday to -0.06% on Monday, indicating renewed buying interest from U.S. investors.
Despite this rebound, analysts caution that the rally may not be sustained. Ryan Yoon, a senior analyst at Tiger Research, pointed out that the Fear & Greed Index recently hit an extreme low of 5, suggesting that the current resurgence might be more of a technical reaction to an oversold market rather than a reflection of genuine bullish demand.
“This bounce is a powerful short-covering rally and a technical reaction to an oversold market washout,” Yoon stated. The data supports this perspective, as aggregated open interest has declined while cumulative volume delta turned positive, indicative of traders closing short positions rather than initiating new long trades.
Research lead Andri Fauzan Adziima from Bitrue elaborated on the mechanics behind this rally, attributing it largely to a short squeeze following a capitulation flush of bearish positions.
Market sentiment has been influenced by a variety of factors, including market speculation driven by CNBC host Jim Cramer. During his broadcast, Cramer suggested that the Trump administration may have bought Bitcoin at $60,000 for the country’s strategic reserve, prompting waves of discussion across social media platforms.
“I heard at $60,000, [Trump] is going to fill the bitcoin reserve,” Cramer said, though no official confirmation or subsequent actions have emerged from the White House. Previously, the administration indicated any expansion of the strategic reserve would need to be cost-neutral.
Treasury Secretary Scott Bessent clarified in recent testimony to lawmakers that he does not hold the authority to invest tax dollars in Bitcoin, reinforcing a cautious stance from the government.
This speculation surrounding Trump’s potential purchase coincides with increased scrutiny from long-time Bitcoin skeptics. Both the Financial Times and gold proponent Peter Schiff have openly criticized the currency, noting that Bitcoin’s value dipped to 15 ounces of gold this week, marking a 59% decline from its November 2021 peak.
Despite the turmoil and criticism, some analysts remain optimistic about Bitcoin’s longer-term prospects. Nick Ruck, director at LVRG Research, predicts a potential rebound as institutional adoption continues to grow.
In the broader market context, Bitcoin’s recovery aligns with upward movements in Asian equities, notably with Japan’s Nikkei 225 experiencing a 5% jump following recent political developments.
As Bitcoin stabilizes around $70,400 according to latest market data, the dynamics of investor behavior amidst ongoing economic uncertainty will remain a key narrative for crypto enthusiasts.
