SKN | Bitcoin Reclaims $70,000 as Cooling Inflation Sparks Recovery After $8.7 Billion Liquidation Wave

Bitcoin rebounded toward the $70,000 level after softer-than-expected U.S. inflation data eased pressure on risk assets, helping the crypto market recover from an estimated $8.7 billion liquidation-driven wipeout earlier in the week. The move underscores how closely digital assets remain tethered to macroeconomic signals, particularly interest rate expectations and liquidity conditions.

Market Reaction: From Forced Selling to Tactical Reentry

The rebound followed a sharp drawdown that triggered roughly $8.7 billion in liquidations across crypto derivatives markets over several sessions, according to aggregated exchange data. Leveraged long positions accounted for the majority of forced unwinds, accelerating Bitcoin’s descent below key technical levels before stabilization emerged.

Following the inflation release, Bitcoin posted intraday gains of approximately 3–5%, while Ether and other large-cap tokens recorded similar percentage advances. Trading volumes spiked above recent daily averages, suggesting renewed participation from both short-term traders covering positions and longer-term investors selectively adding exposure. Funding rates normalized after briefly turning negative, indicating that excessive leverage had been flushed from the system.

Macro Catalyst: Inflation and Liquidity Expectations

The inflation print showed signs of cooling price pressures, reinforcing expectations that the Federal Reserve may maintain a more measured policy stance. Treasury yields edged lower, and the U.S. dollar softened modestly, providing a more supportive backdrop for non-yielding assets such as cryptocurrencies.

Historically, Bitcoin’s sensitivity to inflation surprises has increased as institutional participation has grown. Digital assets are now frequently positioned within multi-asset portfolios, meaning macro data releases influence allocation decisions similarly to equities or commodities. The recent recovery highlights how rapidly sentiment can pivot when liquidity expectations shift.

Derivatives and Market Structure Dynamics

The earlier liquidation cascade revealed structural vulnerabilities tied to elevated leverage. Open interest in perpetual futures had reached multi-week highs prior to the decline, amplifying downside volatility when prices breached technical support. The subsequent reduction in open interest and leverage suggests a healthier positioning environment in the near term.

Options markets reflected increased implied volatility during the drawdown, though volatility metrics have since moderated. This reset may reduce the probability of immediate outsized swings, though macro-driven catalysts remain potent triggers.

Investor Sentiment: Resilience Amid Volatility

Sentiment indicators that had briefly entered “extreme fear” territory have rebounded toward neutral levels. Institutional flows into spot Bitcoin ETFs remained steady during the volatility episode, signaling continued strategic allocation rather than broad-based capitulation. Such resilience suggests that the market’s foundation may be more structurally robust than in prior cycles dominated by retail speculation.

Looking ahead, sustained recovery will likely depend on the durability of macro stabilization and the absence of new leverage imbalances. For sophisticated crypto investors, the episode reinforces two critical themes: the impact of macro data on digital asset pricing and the importance of monitoring derivatives positioning as a volatility amplifier. While the reclaiming of $70,000 marks a notable technical milestone, broader liquidity trends and policy signals will shape the trajectory of the next phase in crypto market development.