Bitcoin Rebounds As Liquidations, ETF Inflows Spark Recovery

(MENAFN- Khaleej Times) Bitcoin has staged a sharp rebound after a week of heavy selling, climbing about 5–6 per cent to trade near the $68,000–$70,000 range and briefly revisiting its previous 2021 peak around $69,000.

The recovery has helped the world's largest cryptocurrency recoup nearly 12 per cent from its February lows, but analysts caution that the move may represent a technical rebound rather than the start of a sustained bull run.

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The latest rally was triggered largely by forced liquidations in the derivatives market rather than fresh bullish catalysts. Data from Coinglass shows that more than $571 million in crypto positions were liquidated in 24 hours, with Bitcoin accounting for about $231 million and Ethereum for over $202 million. More than 85 per cent of the liquidations came from short positions, forcing bearish traders to close bets and accelerating upward momentum.

The sudden squeeze wiped out positions of more than 132,000 traders globally and pushed Bitcoin higher, even as broader market fundamentals remained mixed. Analysts say such liquidation-driven rallies can be sharp but are often temporary unless supported by sustained demand.

Another key support for the rebound has been renewed inflows into spot Bitcoin exchange-traded funds (ETFs).

On February 25 alone, spot ETFs recorded about $506.6 million in net inflows, bringing cumulative inflows to roughly $54.6 billion. Institutional demand through ETFs has emerged as a major structural driver of Bitcoin prices since their introduction, helping to stabilise sentiment during periods of volatility.

The recovery extended beyond Bitcoin to the broader crypto ecosystem. Ethereum, Solana, XRP, Cardano and Dogecoin all gained between 6 and 12 per cent, while crypto-linked equities also surged. Coinbase shares jumped about 14 per cent, Strategy - one of the largest corporate Bitcoin holders - gained roughly 9 per cent, and stablecoin issuer Circle rose more than 30 per cent following strong earnings.

Despite the rebound, trading activity and participation remain subdued compared to previous bullish phases. Dessislava Ianeva, research analyst at Nexo, noted that average Bitcoin trading volumes in 2026 are about 17 per cent lower than the 2025 average, reflecting weaker market participation.

“In 2026, BTC average trading volumes are down roughly 17 per cent versus the 2025 average, reflecting subdued market participation,” Ianeva said, adding that derivatives positioning has normalised and funding conditions have cooled.“This points to orderly deleveraging rather than systemic stress.”

Market data underscores the cautious sentiment. Bitcoin trading volumes have dropped to around $52 billion from $125.5 billion earlier in February, while open interest in futures markets has declined from about $37.5 billion in January to near $21.5 billion - a fall of roughly 43 per cent. The decline indicates fewer traders are willing to take large leveraged positions, limiting the strength of the current rally.

Long-term holders also continue to reduce exposure. On-chain metrics show a net reduction of more than 75,000 BTC over a 30-day period, suggesting that experienced investors are still distributing supply rather than accumulating aggressively. Historically, sustained bull markets tend to begin when long-term holders start accumulating, making the current trend a headwind for a stronger recovery.

From a technical perspective, Bitcoin faces significant resistance between $70,000 and $72,000 - a zone where the price has been rejected multiple times in recent months. A decisive break above this range could open the path toward the $78,000 level, which analysts consider a key fair-value benchmark based on on-chain capital flow data.

Joel Kruger, crypto market strategist, said the market remains in a cautious phase.“It is too early to confirm a full trend reversal. Bitcoin needs a clear break above major resistance to signal stronger bullish momentum. Until then, consolidation is the more likely scenario,” he noted.

Antonio Di Giacomo, senior market analyst at XS, added that Bitcoin's recovery is closely tied to broader risk sentiment in global markets.“When risk appetite improves in equities, particularly in the technology sector, speculative flows often return to crypto. But macro uncertainty, including trade tensions and dollar volatility, continues to weigh on high-risk assets,” he said.

Bitcoin remains nearly 50 per cent below its all-time high of about $126,000 reached in October, highlighting the scale of the corrective phase the market has undergone. Analysts say the sustainability of the current rebound will depend on stronger institutional inflows, improved macroeconomic clarity and a revival in trading participation.

Analysts believe Bitcoin appears to be at a critical inflection point. While structural improvements such as ETF demand and reduced leverage are helping stabilise the market, weak conviction among investors and strong resistance near $70,000 suggest that the path to a sustained rally may still be uneven, they said.

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