SKN | Bitcoin Rebound Stalls Near $71,000 as Fear Reaches Deepest Levels Since 2022

Key Points

• Bitcoin’s rebound has stalled near $71,000, reinforcing views that the move was a bear-market relief rally.

• Sentiment has fallen to its most fearful levels since 2022, while liquidity and trading volumes continue to decline.

• Analysts warn that thin markets could trigger another test of long-term support near $60,000.

Bitcoin’s sharp rebound from last week’s capitulation-style selloff is already showing signs of fatigue. After plunging into the low-$60,000 range, the world’s largest cryptocurrency snapped back toward $70,000 over the weekend, only to stall near $71,000 as selling pressure re-emerged. Traders are increasingly viewing the move as a textbook bear-market relief rally rather than the start of a durable recovery.

Bitcoin was trading around $70,400 at publication time, struggling to clear resistance as sentiment remains deeply fragile and liquidity thin. The pause has refocused attention on whether the market has truly flushed excess risk — or whether another leg lower still lies ahead.

A Relief Rally Meets Heavy Supply

Market participants say the rebound has collided with a wall of overhead supply from investors eager to exit at better prices after enduring months of declines. Alex Kuptsikevich, chief market analyst at FxPro, said the recovery lacked conviction almost immediately.

“There is still a huge supply in the markets from those who want to exit the first cryptocurrency on the rebound,” Kuptsikevich said, warning that conditions remain ripe for another test of long-term support. He pointed specifically to the 200-week moving average — a level often watched during late-cycle drawdowns — which sits near the $60,000 area.

From a technical standpoint, the failure to extend gains above $71,000 reinforces the view that the bounce was driven more by short covering and opportunistic dip buying than by renewed demand from long-term investors.

Sentiment at Capitulation Extremes

Sentiment indicators underline the unease. The Crypto Fear & Greed Index plunged to a reading of 6 over the weekend, matching levels last seen during the FTX-driven collapse in 2022, before recovering modestly to 14 by late Monday. While the uptick suggests panic has eased slightly, analysts caution that such low readings rarely coincide with confident buying.

Kuptsikevich described sentiment as “too low for confident purchases,” arguing that the mood reflects structural caution rather than a fleeting emotional response. In past cycles, similar conditions have often preceded extended periods of choppy trading rather than immediate reversals.

Psychologically, the market appears stuck between fear of missing a rebound and fear of catching a falling knife — a combination that tends to produce short-lived rallies and repeated failures at resistance.

Liquidity Thins as Participation Fades

Liquidity conditions are compounding the problem. With order books thinner, relatively modest sell orders can move prices sharply, triggering stop-losses and forced liquidations that exaggerate volatility. This feedback loop helps explain why bitcoin can swing thousands of dollars in a single session while still failing to establish a clear trend.

A recent note from Kaiko described the backdrop as a broad risk-off unwind. According to the firm, aggregate trading volumes across major centralized exchanges have fallen roughly 30% since late 2025. Monthly spot volumes have dropped from around $1 trillion to closer to $700 billion, pointing to a steady retreat in participation.

Crucially, Kaiko said the decline reflects traders — particularly retail investors — gradually leaving the market rather than being forced out in a single wave of panic selling. That pattern can delay the formation of a clear capitulation bottom, as prices drift lower on light volume rather than collapsing in one decisive flush.

Cycle Context and the Road Ahead

Kaiko also framed the move within bitcoin’s familiar four-year halving cycle. After peaking near $126,000 in late 2025, the pullback into the $60,000–$70,000 zone represents a drawdown of more than 50%. Historically, such declines often take months to resolve and are marked by multiple failed rallies before a durable base forms.

For now, the $60,000 region remains the key battleground. A sustained defense could lead to sideways consolidation as leverage resets and sentiment stabilizes. Failure to hold, however, could see thin liquidity once again amplify selling pressure.

The stalled rebound suggests that while panic may have peaked, confidence has not returned. Until liquidity improves and sentiment lifts meaningfully, bitcoin’s rallies risk running into the same wall — resistance built not just of charts, but of caution.