Wednesday saw a strong rebound in Bitcoin prices, briefly approaching the $70,000 mark and ending a three-day losing streak. During New York trading hours, Bitcoin surged as much as 8.5% intraday, hitting approximately $69,500, marking its largest single-day gain since February 6th. Simultaneously, Ethereum rose about 12% to around $20,85. Stablecoins, crypto-related stocks, and some fintech companies also saw their prices strengthen, indicating a recovery in market sentiment and capital flow.
Market analysts pointed out that this rebound in crypto assets is closely tied to the stabilization of the U.S. stock market. Earlier, a U.S. Supreme Court ruling stated the Trump administration lacked the authority to impose tariffs under emergency powers, causing market volatility. Subsequently, Trump indicated he would pursue global tariffs, which was one of the triggers for the sharp market decline earlier this week. However, after Trump’s recent defense of the economic performance, sentiment towards risk assets improved. Notably, he did not mention digital assets in his latest remarks.
Industry insiders hold differing views on this rebound. Daniel Reis-Faria, CEO of ZeroStack, believes that overall market demand for crypto assets has been relatively weak recently, but capital is gradually rotating into altcoins. Caroline Mauron, co-founder of Orbit Markets, pointed out that this rally largely reflects “buying the dip” behavior following a significant correction. If Bitcoin can reclaim the $70,000 level, the market narrative might shift. However, more voices urge caution regarding the sustainability of the uptrend. Jake Ostrovskis, OTC Trading Director at Wintermute, stated that after a substantial pullback, it’s unwise to over-interpret short-term rebounds. Unless Bitcoin returns to above $75,000, it will be difficult to attract more capital inflow. Data shows that approximately 45% of the circulating Bitcoin supply is currently in a state of unrealized loss, which to some extent suppresses upward momentum.
Alex Kuptsikevich, Chief Market Analyst at FxPro, drew parallels between the current situation and the market conditions of 2022, suggesting that the market might experience a prolonged period of consolidation after the sharp decline before re-entering an upward cycle. Since hitting its peak last October, Bitcoin’s price has nearly halved. From any perspective, this sell-off is the most severe since the FTX collapse. However, an intriguing phenomenon amidst this selling spree is that the institutional framework built around Bitcoin has not collapsed alongside it.
Despite Wednesday’s rebound, Bitcoin remains stuck below $70,000, with its market capitalization significantly eroded. Nearly half of all on-chain holdings are at a loss, and ETF funds have experienced continuous outflows, leading some to believe that Bitcoin’s mainstreaming process might be faltering. However, contrarian investors argue that these outflow figures need to be interpreted within a broader context. Brett Munster from Blockforce Capital pointed out that since the launch of spot Bitcoin ETFs in January 2024, cumulative net inflows have reached tens of billions of dollars, with recent outflows accounting for only about 6% of the total. He analyzed that this clearly indicates an investor base consolidating its positions rather than panicking. Among the top 25 Bitcoin ETF holders, 17 increased their positions in the fourth quarter.
Simultaneously, the supply side is also tightening organically. The fourth Bitcoin halving in April 2024 cut the new issuance rate in half. As more tokens become locked up, the freely circulating supply available for trading is shrinking. Should a rebound occur, its intensity could far exceed expectations. Matthew Hougan, Chief Investment Officer at Bitwise Asset Management, stated that the long-term rationale driving Bitcoin’s appreciation remains valid: the world is becoming increasingly digital, global concerns about fiat currencies are growing, and both regulatory frameworks and access conditions are continuously improving.
Although bearish arguments still find strong support in price charts, the infrastructure underpinning the market is not only intact but also growing stronger. Whether this is more important than the price, or whether the price will eventually drag down the infrastructure, is precisely the bet contrarian investors are making. At this moment, this voice may seem lonely, but the evidence beneath the price surface suggests this situation might not last much longer.
