Bitcoin’s $70K Comeback: Relief Rally or Just a Pause i...

Bitcoin has reclaimed the $70,000 level after cooler U.S. inflation data revived risk appetite across markets. However, the rally comes amid deep market anxiety, with the Crypto Fear & Greed Index still in extreme fear territory. Over $8.7 billion in realized losses last week suggests a capitulation phase, where weak hands exit and long-term investors accumulate, potentially setting the stage for market stabilization.

Bitcoin has rebounded above the $70,000 mark after cooler-than-expected U.S. inflation data revived risk appetite across financial markets. Despite the recovery and a broad altcoin rally, the Crypto Fear & Greed Index remains in extreme fear, highlighting deep market anxiety. With $8.7 billion in realized losses and institutions sitting on billions in unrealized drawdowns, the current rally may reflect a classic capitulation phase rather than a full bull-market revival.

Bitcoin’s return to the $70,000 level marks a critical psychological recovery for the crypto market. After briefly plunging near $60,000 earlier in the month, the flagship digital asset is now staging a rebound, driven by softer inflation data and rising expectations of potential interest rate cuts.

But beneath the surface, market sentiment remains fragile, suggesting the rally may be more about short-term relief than long-term conviction.

The Inflation Trigger: Cooler CPI Sparks Risk Appetite

The latest U.S. Consumer Price Index (CPI) data showed:

Metric	Actual	Forecast
January inflation	2.4% YoY	2.5% YoY

This slight downside surprise was enough to:

Lift equities.
Boost cryptocurrencies.
Increase expectations of rate cuts.

Rate-cut probability shift

Market	Earlier Odds	Current Odds
Kalshi (April cut)	19%	26%
Polymarket (April cut)	13%	20%

Lower rates generally:

Reduce returns on safe assets.
Increase attractiveness of risk assets like Bitcoin.

Crypto Market Snapshot: Broad-Based Rally

Asset	Price	24H Change
BTC	$69,519	+4.56%
ETH	$2,068	+6.30%
XRP	$1.47	+5.20%
BNB	$627	+4.00%
SOL	$86.66	+7.97%
BCH	$561	+10.05%
ZEC	$284	+22.50%
HBAR	$0.103	+9.26%

The rally was broad-based, with several altcoins posting double-digit gains, indicating renewed speculative appetite.

Fear Still Dominates: The Sentiment Disconnect

Despite the price rebound, the Crypto Fear & Greed Index remains in extreme fear territory.

This level of fear was last seen during:

The 2022 bear market.
The collapse of major crypto institutions.

Sentiment vs price behavior

Indicator	Current State
Bitcoin price	Recovering
Market sentiment	Extreme fear
Institutional activity	Cautious
Retail behavior	Selling into rallies

Expert Insight: “The main driver right now is fear—fear that prices could still go lower. Many investors are using rallies as exit opportunities.”

The $8.7 Billion Capitulation Event

One of the most critical signals in the market is the scale of recent losses.

Key loss metrics

Metric	Value
Realized Bitcoin losses (1 week)	$8.7 billion
Treasury firm unrealized losses	$21 billion (peak)
Current treasury unrealized losses	$16.9 billion

This scale of losses is:

Second only to the fallout from the 3AC collapse.
Considered by analysts a “textbook capitulation event.”

Capitulation phases typically:

Transfer coins from weak hands to long-term holders.
Stabilize markets over time.
Lay the groundwork for future rallies.

Supply Rotation: Weak Hands to Strong Hands

Historically, major Bitcoin bottoms have formed when:

Weak holders exit.
Long-term investors accumulate.
Selling pressure fades.

Capitulation cycle model

Phase	Market Behavior
Panic selling	Weak hands exit
Capitulation	Massive realized losses
Supply rotation	Strong hands accumulate
Stabilization	Price consolidation
Bull phase	New uptrend begins

The current $8.7 billion loss event may signal the market is entering the supply rotation phase.

Volume Dynamics: The Hidden Driver of the Rally

Analysts note that:

Trading volumes remain thin.
Seller exhaustion is supporting prices.
Weekend liquidity conditions are amplifying moves.

This means the rally may not yet reflect:

Strong institutional inflows.
Structural demand shifts.

Key Technical Levels to Watch

Level	Significance
$60,000	Recent panic low
$70,000	Psychological resistance/support
$85,000	Long-term bullish confirmation level

Some analysts believe:

Bitcoin must reclaim $85,000 to restore its long-term bullish structure.

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⚠️ DISCLAIMER: We Are Not Financial Advisors This article is for informational and educational purposes only and should not be considered financial or investment advice. Cryptocurrency markets are highly volatile and involve significant risk. Always conduct your own research or consult a certified financial advisor before making investment decisions.