Bitcoin tries to stabilise
Bitcoin (BTC) has undergone a notable shift in tone this week, with a bearish reversal emerging after an extended eight straight day rally that had pushed prices to a six-week high at $76,008.43. The move highlights how fragile momentum can be once geopolitical events take over.
The week initially began on a constructive footing, with Bitcoin extending its recovery from early March lows and building on a sequence of higher daily closes. The rally had been underpinned by improving institutional flows, including renewed inflows into spot Bitcoin exchange-traded funds (ETFs), and a supportive backdrop of reduced leverage following earlier deleveraging. This combination allowed prices to climb steadily towards the upper end of their recent range.
However, as the situation in the Middle East began to deteriorate, upward momentum began to fade. Traders who had accumulated positions during the recovery used the strength to take profits, slowing the advance and signalling that conviction at higher levels remained limited.
Derivatives positioning played a central role in amplifying the reversal. During the rally, funding rates had gradually increased as long positions were rebuilt, though not to extreme levels. Once the market stalled, these newly established longs became vulnerable. As prices began to edge lower, stop-loss orders on long positions were triggered, leading to a wave of liquidations that accelerated the downside move.
At the same time, the short-covering dynamic that had previously supported the rally dissipated. With fewer bearish positions left to unwind, the market lost an important source of mechanical buying pressure. This left Bitcoin more exposed to discretionary selling as risk-off sentiment reared its head.
External factors were responsible for the change in tone. Renewed geopolitical tensions and a shift back towards risk-off sentiment weighed on broader financial markets, and cryptocurrencies were not immune. Bitcoin, which had briefly been treated as a potential hedge, reverted to behaving more like a risk-sensitive asset, with capital rotating away from higher-volatility exposures.
Institutional flows, while still broadly supportive over the month, showed signs of becoming more selective. After a period of strong inflows, ETF demand appeared less consistent during the latter part of the week. The absence of sustained large-scale dip buying from institutional players allowed the pullback to gather momentum more easily.
Despite the reversal, underlying structural indicators remain relatively stable. Long-term holders have not shown significant signs of distribution, and exchange balances have not surged materially. This suggests that the decline has been driven more by short-term positioning and tactical adjustments than by a breakdown in Bitcoin’s longer-term fundamentals.
Looking ahead, the near-term outlook will depend on whether Bitcoin can stabilise above support and avoid a deeper correction. A failure to hold these levels could open the door to further downside as leverage is unwound more fully. Conversely, if buyers re-emerge and momentum rebuilds, another attempt at breaking resistance could follow.
For now, this week’s bearish reversal underscores a familiar pattern in the current market environment: strong rallies driven by positioning and improving sentiment can quickly give way to equally sharp pullbacks when technical barriers hold and confidence falters.
Bitcoin bullish case:
As long as Bitcoin remains above its 19 March low at $68,771.20, the cryptocurrency may stabilise. For this to happen a rise and daily chart close above the 19 March high at $71,616.98 would need to be seen. Only then could the 8 February high at $72,240.57 and above be revisited.
Bitcoin bearish case:
While no bullish reversal takes Bitcoin above its $74,071.02 early March high, downside pressure should retain the upper hand.
A fall through the 19 March low at $68,771.20 may put the 12 to 19 February lows at $65,631.93 – $65,107.17 on the map. Further down lies the 8 March low at $65,618.93 which may also be hit in this scenario.
Short-term outlook:
Bearish while below the 4 March high at $74,071.02.
Medium-term outlook:
Neutral while below the 17 March high at $76,008.43 but above the 24 February low at $62,527.40.