Bitcoin has started an independent trend. Is it a rebound or a reversal?

Original Title: Bitcoin Begins to Move Independently, Is This a Bounce or a Reversal

Original Author: Rhythm BlockBeats

Original Source:

Reprinted: Mars Finance

Federal Reserve Chairman Kevin Warsh did not announce a rate cut. When discussing inflation, he stated that inflation expectations and inflation risks have declined over the past few weeks. He also reiterated that the Fed will stick to its 2% inflation target.

The latter part was not dovish, but the market latched onto the former. Bitcoin quickly rebounded from its lows, approaching $60k again. Subsequently, U.S. employment data weakened, rate hike expectations continued to cool, and the market trend shifted from "repair" to "relay."

In the past few weeks, the market's biggest fear was that the Fed would keep interest rates high or even raise tightening expectations again. For Bitcoin, this is not just an abstract macro judgment. The stronger the rate hike expectations, the narrower the valuation space for risk assets, and leveraged positions become more vulnerable to being wiped out first.

After Warsh downplayed inflation risks, the market first repriced the "pressure from rate hikes." The weak employment data further pushed in this direction. Bitcoin moved from around $57,742 back above $60k. While the price change seems rapid, it essentially represents a retreat from the previous panic trades.

On Deribit, traders are heavily buying $50k put options. Open interest in gold perpetual futures has hit a new all-time high. A death cross has appeared on the technical charts. These signals together indicate that the market is not simply bearish; rather, it is buying insurance against a decline.

This is different from a normal pullback. In a normal pullback, sellers just want to exit. In a panic defense, traders simultaneously buy puts, buy safe-haven assets, and reduce leverage. When prices hit key levels, liquidations amplify volatility.

CoinGlass data shows that when Bitcoin fell to around $57.7k, it triggered approximately $395 million in liquidations. This figure indicates that the price decline was not just driven by selling pressure but also by forced exits of leveraged positions.

After forced exits, the market actually finds it easier to bounce back.

The reason is straightforward. The previous decline eliminated some long leverage and pushed defensive sentiment to an extreme. When macro news turns slightly positive, prices only need to return near key levels to make shorts nervous. Short covering is essentially buying. The higher the price goes, the more it forces bearish positions to unwind.

This is the second layer of推力. When Ethereum and Solana led the rally, Bitcoin briefly approached $62k, triggering about $281 million in short liquidations. It's not a matter of new conviction but a reaction force from position structure.

Therefore, this rebound cannot be attributed solely to one statement from Warsh. A more accurate breakdown is in three phases.

First, inflation risks were downplayed, easing market concerns about the Fed's path. Second, weak employment data continued to suppress rate hike expectations. Third, short positions were forced to cover, pushing spot prices higher faster.

If you only look at the first phase, the market trend is easily interpreted as "macro positive." If you only look at the third phase, you might mistakenly think it's purely a technical bounce. The real structure is that both occurred in the same time period. Macro gave prices a reason to rise, and positioning gave prices the speed to rise.

The reaction of altcoins also indicates this is not a single-coin trend.

After Bitcoin reclaimed $60k, Ethereum, Solana, and Dogecoin rallied in tandem. Subsequently, Ethereum led the major cryptocurrencies, gaining about 12% over the past week. When capital starts spilling from Bitcoin to Ethereum and Solana, the market is no longer just trading "whether Bitcoin can hold."

The CoinMarketCap Altcoin Season Index rose to 52/100, the highest in three months. This level is subtle. It has just crossed the midpoint, indicating that risk appetite has indeed returned, but it has not yet reached the stage of full altcoin euphoria.

This is the first thing to note. The回暖 in altcoin sentiment does not confirm that altcoin season has arrived.

A true altcoin season usually requires broader capital diffusion. What we are seeing now is more like, after Bitcoin stopped falling, the market first bought back large-cap tokens with good liquidity. Ethereum and Solana can outperform, while some small-cap coins remain weak—this divergence itself is a signal.

The second thing is that the options market does not fully believe in the rebound.

The put/call skew for BTC and ETH still shows that traders are willing to pay higher prices for downside protection. Prices have rallied, but insurance is still expensive. This detail is cooler than spot prices.

If traders truly believed the trend had reversed, put premiums would typically decline faster. The current state is more like the spot market has pulled prices back up, while the derivatives market has not yet folded its umbrella.

The third thing is that short squeezes cannot continue indefinitely.

Short covering generates buying pressure, but this buying is one-off. It can push prices out of crowded lows, but it cannot sustain an entire trend alone. After liquidations end, the market needs new spot buying to take over.

So what really matters next is not whether Bitcoin has crossed some round-number level, but who is still buying after it does. Spot ETF flows, stablecoin liquidity, and the strength of Ethereum and Solana's follow-through will be more informative than single-day gains.

The fourth thing is that macro variables are still the same knife.

This rally benefited from declining inflation risks and weakening employment. On the flip side, if subsequent data points to inflation stickiness again, or if the Fed's tone turns hawkish again, the market will use the same logic to price in the reverse. Bitcoin is not an asset detached from macro; it simply reacts faster to changes in macro expectations.

Prices have bounced out of excessive defense, but true confirmation will come when the options market is willing to remove its insurance.