Bitcoin surged 15% to surpass $70,000, yet the options market is indicating a concerning new baseline.

Bitcoin surged from $60,000 to over $70,000 in under 24 hours, recovering most of a severe 14% decline that had challenged various bottom-calling theories in the market.

The rapidity of the rebound, 12% in a single session and 17% from the intraday low, was intense enough to suggest a resolution of capitulation. However, the underlying dynamics of the bounce indicate a different narrative: this was a combination of cross-asset stabilization and forced-position rebalancing, rather than a surge of conviction-driven spot demand.

Moreover, the derivatives market, still heavily positioned for downside protection, is reflecting the potential that $70,000 may serve as a pause point rather than a support level.

Forced unwinds met macro stress

On February 5, trading began near $73,100, briefly rose higher, and then plummeted to $62,600 by the end of the day, resulting in a one-day drop that liquidated around $1 billion in leveraged Bitcoin positions, as per CoinGlass data.

This figure alone illustrates the forced-selling cascade, but the overall situation was even more severe.

Open interest in BTC futures decreased from approximately $61 billion to $49 billion over the preceding week, according to CoinGlass, indicating that the market had already been shedding leverage prior to the final flush.

The catalyst was not specific to crypto. The selloff was framed as a deterioration in risk sentiment, driven by declines in tech stocks and a volatility shock in precious metals, with silver dropping by as much as 18% to around $72.21, negatively impacting correlated risk assets.

Research from Deribit confirmed the spillover, highlighting that derivatives sentiment turned extremely bearish, with negative funding rates, inverted implied volatility term structures, and a 25-delta risk-reversal skew reduced to about -13%.

These conditions exemplify classic “crowded fear” scenarios where positioning amplifies price movements in both directions.

A policy narrative further fueled the situation. Reuters reported market reactions to President Donald Trump’s appointment of Kevin Warsh as Federal Reserve chair, with traders interpreting the selection as an indication of impending balance-sheet contraction and tighter liquidity conditions.

Simultaneously, miners encountered significant margin pressure. TheMinerMag reported that hash price fell below $32 per petahash per second, with network difficulty expected to decrease by approximately 13.37% within two days. This relief would not materialize until after the price had already breached support.

Bitcoin’s 48-hour price movement illustrates a decline from $73,000, a dip below $63,000, a local bottom near $60,000, and a subsequent recovery above $70,000.

Macro reversal plus squeeze mechanics

On February 6, trading commenced where it left off on February 5, dipped to an intraday low near $60,000, and then surged to a high of around $71,422, which it failed to surpass three times before falling back below $70,000.

The impetus was not internal to crypto, but rather a sharp reversal in the cross-asset landscape. Wall Street experienced a rally: the S&P 500 rose by 1.97%, Nasdaq increased by 2.18%, Dow climbed by 2.47%, and the SOX semiconductor index jumped by 5.7%.

Metals rebounded significantly, with gold increasing by 3.9% and silver by 8.6%, while the dollar index fell by 0.2%, indicating a loosening of financial conditions.

Bitcoin moved in tandem with this shift. The correlation is clear: when technology stabilizes and metals recover, BTC is drawn along due to shared risk exposure.

However, the intensity of the rebound also reflects the positioning in the derivatives market. A skew near -13%, negative funding, and inverted volatility structures create conditions where any macro relief can trigger short-covering and forced rebalancing.

The rebound was fueled by a liquidity event, intensified by the unwinding of crowded short positions.

Nonetheless, the forward-looking indicators remain bearish. Derive data shows substantial put open interest concentrated at $60,000-$50,000 strike prices for the February 27 expiry.

Sean Dawson from Derive informed Reuters that the downside demand is “extreme.” This is not retrospective analysis, but rather traders actively hedging for another downward movement, even following the bounce.

Bitcoin deleveraging chart illustrates a spike in liquidations, a reduction in open interest from $62 billion to $49 billion, negative funding rates, and skew reaching -13%.

Can $70k hold? The framework

The argument for maintaining a position above $70,000 hinges on three conditions.

First, the macroeconomic recovery must continue, with technology stabilizing, yields not tightening, and the dollar remaining stable.

The bounce was explicitly cross-asset. If equities decline again, BTC is unlikely to decouple.

Second, leverage must continue to decrease without new forced selling. Open interest has already seen a significant drop, mitigating air-pocket risk.

Third, miners need genuine relief when the difficulty adjustment occurs.

If the price remains within this framework, the anticipated 13.37% drop could alleviate marginal selling pressure and enable hashrate stabilization.

The case for another shakeout is supported by three factors.

First, options positioning remains tilted toward the downside. The largest concentration of puts is at $60,000-$50,000 for late February, a forward-looking signal embedded in market-implied probabilities rather than retrospective sentiment.

Second, derivatives signals remain tenuous. A skew near extremes, recent negative funding, and inverted volatility structures align with a relief rally within a fear regime rather than a trend reversal.

Third, ETF flow data indicate ongoing outflows. Bitcoin ETFs recorded $690 million in monthly net outflows as of February 5.

While the results for February 6 are not yet available, the trend suggests that institutional allocators have not shifted from de-risking to re-engagement.

Signal bucket	Metric	Latest reading / regime (as of press time)	Bullish confirmation (what change you need)	Bearish continuation (what to fear)	Source
Derivatives	Perp funding rate	Negative (below 0%) — “extreme bearishness” regime	Funding flips positive and remains positive across major venues (not just a 1–2 hour blip)	Funding stays negative / whipsaws while price fluctuates → “relief rally” risk	Deribit Insights / Block Scholes, Week 6 (funding below 0%; BTC funding negative)
Options risk	25D risk reversal (skew)	Short-dated skew as low as ~ -13% (put demand surge)	Skew rebounds toward 0 (less demand for downside protection) and holds	Skew remains deeply negative (persistent protection bid)	Deribit Insights / Block Scholes, Week 6 (25D RR “as low as -13%”)
Leverage	Futures open interest (OI)	Deleveraging / OI falling (forced liquidation phase); recent reporting highlights ~$55B equivalent OI exiting in 30 days	OI stabilizes (no rapid re-leveraging) while price holds >$70K	OI rebuilds quickly into rallies → higher odds of another liquidation leg	Glassnode: forced deleveraging + long liquidation spikes
Flows	Spot BTC ETF net flows (daily/weekly)	Net outflows: Feb 4 – $544.9m, Feb 5 – $434.1m; Feb 6 not yet posted on the tape	Outflows decelerate to flat, then modest inflows (even “less negative” helps in thin liquidity)	Outflows accelerate (more -$400m to -$500m days) → repeated shakeout risk	Farside Investors daily ETF flow table
On-chain stress	Realized losses (7D avg)	> $1.26B/day (7D SMA) — capitulation/forced selling still elevated	Realized losses peak then trend down while price holds the $70K area (seller exhaustion)	Losses stay elevated or rise into bounces → distribution, not accumulation	Glassnode Week On-chain Week 05 (“7D SMA … above $1.26B per day”)
Mining	Hashprice + next difficulty adjustment	Hashprice < $32/PH/s (record low); difficulty projected -13.37% next adjustment (~2 days)	Difficulty relief arrives and hashrate stabilizes (reduced miner stress/sell pressure) while BTC holds >$70K	Hashprice falls further / hashrate drops more → miner selling/treasury drawdowns increase	TheMinerMag (hashprice < $32/PH/s; difficulty proj. -13.37%)

What $70k actually means

The level itself is not magical. Its importance lies in its position above Glassnode’s identified on-chain absorption cluster between $66,900 and $70,600.

Maintaining a position above $70,000 would indicate that the cluster absorbed sufficient supply to stabilize price movements, at least temporarily. However, sustaining this requires more than mere technical support. It necessitates a return of spot demand while derivatives hedging unwinds and institutional flows stabilize.

The rebound from $60,000 was genuine, but its composition is crucial. Cross-asset stabilization can reverse if macro conditions change.

Unwinding forced positions creates mechanical rebounds that do not necessarily lead to sustained trends. Additionally, options traders continue to price in a significant likelihood of a move toward $50,000-$60,000 over the next three weeks.

Bitcoin has reclaimed $70,000, but it is already consolidating below that threshold, indicating a pause before another test in which three conditions must occur sequentially: macro risk appetite must hold, ETF outflows must decelerate or reverse, and derivatives sentiment must normalize beyond short-term relief.

The market experienced a sharp rebound, but the forward curve and flow data imply that traders are not yet betting on durability. The $70,000 level is not the final destination; it is merely the point where the next phase of the discussion will be determined.

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