ETF Frenzy for Capital Inflow, Strong Bearish Momentum in Futures: Bitcoin Surges Past $69,000, Can the Short-term Rebound Continue?

Despite ongoing geopolitical uncertainties, the cryptocurrency market has shown remarkable resilience, with Bitcoin breaking through $69,000 today (4th) and approaching the $70,000 mark again. Market analysis suggests that this rally is less about investors’ renewed “bullish confidence” and more driven by a technical rebound fueled by short covering.

Crypto market maker Enflux pointed out that the market has neither fully priced in the disaster nor is it optimistic about easing tensions. Last weekend, shorts capitalized on news of Middle Eastern military conflicts, causing Bitcoin to drop to $63,000. However, once the market realized the situation was not escalating into a full-scale regional war affecting global trade routes, long positions that had been suppressed were quickly squeezed, triggering a short squeeze.

Enflux described in its report that cryptocurrencies react to geopolitical shocks much faster than traditional assets:

When gunfire erupts or sanctions tighten, capital rushes to find exit routes. During turbulent times, Bitcoin often acts as a “pressure release valve.”

Although retail investor sentiment remains cautious, institutional players continue to deploy in the market. Data shows that over the past five trading days, Bitcoin spot ETFs have consistently attracted inflows, with a total net inflow of $1.45 billion. On-chain data and derivatives market indicators suggest the crypto market is still in a “healing phase.” Glassnode noted that Bitcoin’s relative strength index (RSI) has rebounded from 36 last week to around 41. While momentum has improved, it remains below the 50 threshold, indicating that bulls have not yet gained a decisive advantage.

The spot market has also improved, with trading volume rising from about $6.6 billion last week to approximately $9.6 billion. Buying and selling pressures are becoming more balanced, indicating that previous panic selling has subsided.

However, the derivatives market remains cautious. Glassnode indicated that the cost of holding leveraged long positions has significantly decreased, but sellers still dominate the futures market, showing that leveraged traders remain conservative about the future outlook.

Market sentiment forecasts also reflect this shift. The probability of Bitcoin falling to $65,000 by March has decreased by 11 percentage points to 73%, while the chance of dropping to $60,000 has fallen by 10 points to 41%. On the decentralized prediction platform Polymarket, the probability that Bitcoin will hit $60,000 before $80,000 has also declined by 12 points to 61%.