Bitcoin has shown resilience, rebounding to $71,500 following a significant sell-off that shook the cryptocurrency market. This recovery comes after Bitcoin experienced a nearly 20% drop, contributing to a $500 billion wipeout in the overall crypto market capitalization over the past week.
The recent market turbulence saw Bitcoin's price dip below $63,000, levels unseen in the past 16 months, marking a near halving of its value since its peak in October. The slump, which began in early October 2025, contrasts sharply with Bitcoin's performance following the election of Donald Trump in November 2024, when it surged in anticipation of a more crypto-friendly administration. However, those gains have now been erased.
Derivatives market data suggests a cautious outlook despite the price recovery. Options skew, a measure of the difference in price between options with the same expiration date but different strike prices, has hit 20%, signaling that traders are wary of another wave of liquidations. This caution is fueled by the liquidation of $1.8 billion in leveraged bullish futures contracts over five days, raising concerns that major hedge funds or market makers may have faced significant losses. Unlike the market collapse on Oct. 10, 2025, which saw a record $4.65 billion liquidation of Bitcoin futures, the recent downturn has been characterized by three consecutive weeks of downward pressure.
Despite the price recovery, Bitcoin is struggling to match the gains of gold or tech stocks, indicating low leverage demand. This suggests that while investors are buying the dip, there's limited appetite for high-risk, high-reward positions. Some analysts believe the recent decline in Bitcoin is part of a broader "risk-off" move across global markets, spurred by selling pressure in global equities and technology stocks. Elevated leverage in the crypto market amplified the downturn, triggering forced liquidations as prices fell.
Adding to the market's anxiety are geopolitical tensions and rapid advancements in artificial intelligence, contributing to a risk-off sentiment that has impacted Bitcoin's performance. This is reflected in traditional market indicators like CNN's Fear and Greed Index, which remains firmly in "fear" territory, and the VIX volatility index, which recently spiked to its highest level since November.
Still, Bitcoin's long-term prospects remain positive, with off-chain demand pressures continuing to exert a significant influence on its price. Despite recent volatility, residents in countries facing economic isolation or hyperinflation are increasingly turning to cryptocurrency as a store of value.