Bitcoin returns to $70k, is the market betting that the worst is over?

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Original author: ChandlerZ, Foresight News

During the Qingming Festival holiday, both A-shares and Hong Kong stocks are closed for trading, but Bitcoin price action never stops.

Starting on April 6, BTC moved off the early Asia-session low of $67,400, surged to a intraday high that broke above $70,300, setting a new high since March 26 and up more than 4% from the day’s low. In the same period, Ethereum rose from around $2,050 to $2,170, up about 6%. When US stocks closed, it was still above $2,140, with a near-4% gain over the past 24 hours.

CoinGlass data shows that over the past 24 hours, the total liquidation across the whole market was about $229 million, including $127 million liquidated on short positions and $102 million liquidated on long positions. When BTC broke above $69,000, short positions totaling about $136 million were concentrated around $69,863, and the rally directly triggered a large-scale round of short liquidations.

The holiday market was dominated by the situation in the Middle East

The macro logic driving this leg of the rally is still Iran, but the storyline has new developments.

On March 21, Trump had set a 48-hour deadline for Iran, demanding that it reopen the Strait of Hormuz; then he extended it by more than a week and instead announced the launch of diplomatic talks. In the following weeks, he went back and forth between “reopening the strait after reaching an agreement” and “reopening the strait does not require an agreement,” and the market moved with each headline. At 8:00 PM on April 7, the second final deadline he set arrived; this time the wording was upgraded—if there is no agreement by then, Iran would “live in hell,” and it threatened to strike energy infrastructure and civilian targets.

Meanwhile, U.S. Defense Secretary Hegseth announced at a news briefing on April 7 that that week would see the largest-scale airstrike since actions against Iran began. But in the same briefing, Trump also said there are constructive, willing participants in negotiations with Iran, and disclosed that the U.S. and Iran are discussing a two-phase plan: first reach a 45-day temporary ceasefire, then negotiate a comprehensive agreement. Iran, for its part, publicly rejected the temporary ceasefire, insisting on a permanent end to hostilities, leaving talks at an impasse.

When asked whether the war would be gradually ending, Trump’s answer was: “I don’t know, I can’t say. It depends on what they (Iran) do.”

Affected by this macro backdrop, international markets also saw back-and-forth volatility.

WTI May crude oil futures closed at $112.41 per barrel, hitting new highs since June 2022 for two straight trading days; Brent futures were at $109.77 per barrel. After crude briefly touched $115.48 during the Asia session, it repeatedly pulled back and fought in a tight range, reflecting a high level of disagreement over whether the Strait of Hormuz can maintain navigation.

As for US stocks, the S&P 500 closed up 0.44%, and the Nasdaq closed up 0.54%, with both reaching at least two-week highs. Chip-related indexes rose more than 1%; Micron and SanDisk rose more than 3%. The VIX was 24.15, slightly up from the prior day.

This set of oil up, stocks up, and crypto up looks contradictory on the surface, but the underlying logic is consistent: the market wasn’t pricing an escalation of the war that day—it was pricing out the worst-case scenario. News about a 45-day temporary ceasefire temporarily pushed the tail risk of a systemic breakdown out of the spotlight, risk appetite rebounded across the board, and three categories of assets rallied in the same direction. Oil prices staying elevated is because the Strait of Hormuz has not yet resumed navigation, but they’re no longer accelerating higher—that is, the market has found a temporary equilibrium where things won’t get worse, but they’re not great yet.

Steve Sosnick, Chief Strategist at Interactive Brokers, commented that “the market sees the carrot and also sees the stick. On the one hand, there is ceasefire and talks; on the other hand, there is continued bombing. Aside from the brief volatility at the beginning of Trump’s remarks, investors clearly still hope hostile actions won’t quickly escalate.”

Worth noting is that this pattern has held since the outbreak of the Iran conflict. From the start of the conflict on February 27 through April 3, in the ranking of excess returns relative to the S&P 500, the top four were MSCI Global Energy (+13.0%), Ethereum (+11.3%), the U.S. energy sector (+10.8%), and Bitcoin (+7.0%).

Conversely, the performance of traditional safe-haven assets was surprising: gold fell 7.1% versus the S&P 500, and silver dropped 17.8%, completely opposite to the market’s inertia of “buying gold as a safe haven” seen in previous rounds of geopolitical conflicts.

On-chain structure improves, but new capital hasn’t caught up yet

A Glassnode report shows that internal structure signals of repair are starting to appear in this rally, with momentum strengthening, spot demand stabilizing, and the market’s overall loss-making behavior clearly declining.

Spot market data reflects early signs of a pickup in demand. Spot CVD flipped from -$48.0 million to +$27.9 million, turning net selling pressure into net buying pressure. The Relative Strength Index (RSI) rebounded strongly, spot CVD net of subsidy tax (CVD) turned positive, indicating that buyer enthusiasm has been revived. But declining trading volume suggests that market participation is still relatively low, implying the recovery momentum looks healthy, though it has not been fully confirmed.

The adjustment magnitude in derivatives market positioning has not been large. Open interest fell, long capital cooled off, suggesting lower leverage and a more balanced market environment. Perpetual contract CVD rebounded sharply from -$412 million to $461 million. The futures market’s buyer directionality is clear, and open interest fell from 30.3 billion to 29.7 billion, with no evidence of excessive leverage buildup.

ETF flows show a clear improvement: the week-over-week net outflow of US spot Bitcoin ETFs narrowed sharply from -$405 million to -$22 million, a decline of nearly 95%. ETF MVRV rose from 1.10 to 1.16, and institutional holdings’ unrealized gains expanded.

But the restoration of on-chain fundamentals still lags. The change in realized market cap fell further from -0.6% to -0.7%, meaning new capital hasn’t returned in large scale yet. Hot Capital Share dropped from 21.0% to 20.1%, indicating continued outflow of short-term speculative funds. The 25-Delta skew rose to 16.88%, and the options market’s pricing of downside risk has not faded despite the price rebound.

Crypto market outlook next

Can the rally continue? There are differences in institutional views.

CoinDesk, citing analysts, said that unless Bitcoin can reclaim $75,000, the risk of falling to lower levels still exists; if the current price can’t hold above $70k, it will face fresh pullback pressure after short-term holders’ confidence is lost.

Glassnode’s conclusion is relatively cautious. It said the rebound momentum is improving, spot demand is stabilizing, and loss-driven selling pressure has clearly decreased. However, participation remains soft across exchanges, ETFs, and on-chain dimensions, suggesting market confidence hasn’t fully returned. To make this rally hold, further follow-through is needed in trading volume, capital inflows, and network activity.

April 7 is the final deadline set by Trump. Whether the situation degrades meaningfully after the deadline will directly determine the next direction for crude oil prices and risk assets, and it will also be a key variable in whether Bitcoin can hold $70k.