 ▲ Bitcoin (BTC), short positions / ChatGPT-generated image |
After intense volatility that threatened the $60,000 level, Bitcoin (BTC) staged a sudden rebound, wiping out $65 million in assets held by investors betting on a continued decline in just one day.
Crypto analyst Lark Davis said in a video posted on his YouTube channel on February 6 (local time) that “strong institutional buying at lower levels pushed Bitcoin briefly up to $71,000.” Traders who had built short positions expecting further downside during the sell-off were caught off guard by the unexpected rebound, suffering heavy losses. CoinGlass, a crypto market data analytics firm, reported that bearish bets dominated the total liquidations in the Bitcoin futures market over the past 24 hours.
The episode, which occurred as open interest in the futures market was rapidly unwound, served to flush excessive leverage from the market. The forced closure of positions held by investors seeking profits in a declining market triggered a short squeeze, amplifying the strength of the rebound. Experts say the rally, which emerged after confirming support at $60,000, represents a technical reaction from oversold conditions and indicates that downside rigidity in the market has strengthened.
Matt Hougan, Chief Investment Officer at Bitwise, commented that “when fear peaked, institutional investors instead identified aggressive buying opportunities.” He reiterated that Bitcoin combines the defensive characteristics of gold with the growth potential of technology stocks, noting that long-term investors used the price drop as a chance to strengthen their portfolios. With inflows into regulated products such as BlackRock’s spot Bitcoin ETF being confirmed, the market is gradually regaining stability.
Although policy uncertainty under the Donald Trump administration and broader macroeconomic variables continue to weigh on markets, Bitcoin’s resilience is outperforming that of other risk assets. Expectations for institutional changes, such as discussions around the U.S. crypto market structure bill (CLARITY), are offsetting downward pressure and supporting investor sentiment. If the administration’s deregulatory stance translates into concrete legislation, the institutionalization of the crypto market is expected to accelerate further.
The crypto market is undergoing a process of cleansing speculative demand and reorienting toward value-focused investors following this large-scale liquidation event. Funding rates in the futures market have fallen to their lowest levels in years, and the prevailing bearish outlook instead became the springboard for a powerful rebound, according to prevailing analysis. Through this bout of volatility, Bitcoin has successfully rebuilt its base to regain market leadership in the first quarter of 2026.
*Disclaimer: This article is for investment reference purposes only, and no responsibility is assumed for investment losses incurred based on it. The content should be interpreted solely as informational.*