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

Federal Reserve Chairman Kevin Warsh did not announce a rate cut. When discussing inflation, he said 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 second half of the statement was not dovish, but the market took the first half first. Bitcoin quickly rebounded from its lows and approached $60k again. Subsequently, U.S. employment data weakened, rate hike expectations continued to cool, and the market shifted from "repair" to "relay."

Over the past few weeks, the market's biggest fear was that the Fed would continue to keep interest rates high or even escalate tightening expectations. For Bitcoin, the stronger the rate expectations, the narrower the valuation room for risk assets, and leveraged positions become more vulnerable to being liquidated first.

After Warsh downplayed inflation risks, the market first repriced "rate hike pressure." After weak employment data, this direction was pushed further. Bitcoin returned to above $60k from around $57,742. The price movement looks fast, but essentially the market is unwinding the previous round of panic trading.

On Deribit, traders concentrated on buying $50k put options. Open interest in gold perpetual futures hit a new high. A death cross appeared on the technical chart. These signals together indicate that the market is buying insurance against a downturn.

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

According to CoinGlass data, when Bitcoin fell to around $57.7k, about $395 million in liquidations were triggered. This figure indicates that the price drop was no longer just driven by selling pressure but by the forced exit of leveraged positions.

After forced exits, the market becomes more prone to rebounds.

The reason is straightforward. The previous decline cleared some long leverage and pushed defensive sentiment to a high level. When macro news marginally loosens, prices only need to return near key thresholds to make shorts nervous. Short covering is essentially buying. The higher the price goes, the more it forces bearish positions to retreat.

This is the second layer of推力. When Ethereum and Solana led the rally, Bitcoin briefly approached $62k, and about $281 million in bearish bets were liquidated.

Therefore, this rebound cannot be attributed solely to Warsh's comment. A more accurate breakdown involves three stages.

First, inflation risks were downplayed, easing concerns about the Fed's path. Second, employment data weakened, further suppressing rate hike expectations. Third, short positions were forced to cover, pushing spot prices faster.

If you only look at the first stage, the market can be easily interpreted as "macro bullish." If you only look at the third stage, it might be mistaken as a purely technical rebound. The real structure is that both occurred in the same period. The macro provided a reason for prices to rise, while positioning provided the speed.

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

After Bitcoin reclaimed $60k, Ethereum, Solana, and Dogecoin rose in tandem. Subsequently, Ethereum led the gains among major cryptocurrencies, rising about 12% over the past week. When funds start spilling from Bitcoin to Ethereum and Solana, the market is no longer just trading "whether Bitcoin can hold."

CoinMarketCap's Altcoin Season Index rose to 52/100, the highest in three months. This level is delicate. It has just crossed the midline, indicating that risk appetite has indeed returned, but it has not yet reached the full euphoria stage for altcoins.

This is the first thing to note. A recovery in altcoin sentiment does not mean an altcoin season has been confirmed.

A true altcoin season usually requires broader capital diffusion. Currently, it's more like after Bitcoin stopped falling, the market first bought back large-cap tokens with good liquidity. Ethereum and Solana outperformed, but some small-cap coins remain weak. This divergence itself is a signal.

Second, the options market is not fully convinced of the rebound.

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

If traders truly believed the trend had reversed, put option premiums would typically drop faster. The current state is more: the spot market pulled prices back first, but the derivatives market hasn't folded its umbrella yet.

Third, short squeezes cannot continue indefinitely.

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

So the real thing to watch next is not whether Bitcoin has reached a certain integer level, but who is buying after it does. Spot ETFs, stablecoin liquidity, the follow-through strength of Ethereum and Solana, will all carry more information than a single day's gains.

Fourth, macro variables are still the same knife.

This rally benefited from reduced inflation risk and weakening employment. On the flip side, if subsequent data points to inflation stickiness again, or if Fed rhetoric turns hawkish again, the market will price in the opposite direction using the same logic. Bitcoin is not an asset detached from macro; it just responds faster to changes in macro expectations.

The price has bounced out of excessive defense, but true confirmation requires the options market to be willing to remove the insurance.