Bitcoin (BTC) has surged back above the $70,000 mark after experiencing a steep decline to nearly $60,000 earlier this month.
Over the past 24 hours, Bitcoin’s value has increased by almost 5%, while the broader CoinDesk 20 (CD20) index climbed by 6.2% during the same timeframe.
This recovery is largely driven by investor reactions to a softer-than-anticipated inflation report from the U.S., alongside renewed appetite for riskier assets. The Consumer Price Index for January showed a year-over-year rise of 2.4%, slightly below the expected 2.5%.
Such data fueled speculation that interest rate reductions might happen sooner than previously thought, boosting both stock markets and cryptocurrencies alike. Lower interest rates tend to make riskier investments more appealing because returns on safer assets decrease.
Prediction markets like Kalshi currently assign about a 26% probability of a quarter-point rate cut in April, up from 19% earlier this week; similarly, Polymarket’s odds have risen from 13% to 20%.
However, beneath this upward momentum lie significant concerns.
The Crypto Fear & Greed Index remains entrenched near levels indicating extreme fear—similar to those seen during last year’s bear market triggered by FTX’s collapse—and has stayed in “extreme fear” territory since early January.
Analysts at Bitwise highlighted that investors realized approximately $8.7 billion in bitcoin losses over the past week alone—the second-largest loss event following Three Arrows Capital’s downfall.
The firm noted that despite these setbacks, shifting ownership from weaker holders toward more committed investors historically aligns with periods of market stabilization; however, such transitions take time to fully develop.
Bitcoin treasury entities are currently holding over $21 billion in unrealized losses—a record high—though recent price gains have reduced this figure down to around $16.9 billion.
The ongoing rally is supported mainly by lower trading volumes typical of weekend sessions and signs that sellers are becoming exhausted. The recent massive realized losses may represent what experts call a “classic capitulation event.”
Nonetheless, pervasive fear continues to dominate market sentiment. As Bitwise research analyst Danny Nelson explained to CoinDesk: “Fear is currently driving everything—the worry that prices will fall further.”
This apprehension leads many investors to treat any price uptick as an opportunity to offload holdings. Whether this pattern persists or if stronger conviction among long-term holders will eventually steer the market toward sustained growth remains uncertain.