$BTC surged above $68,500 during Wednesday's U.S. trading session, posting gains of more than 6% within a 24-hour window as heavily crowded bearish positioning across digital asset markets began to rapidly unwind.
The recovery effectively erased a painful early-week decline that had dragged BTC below the $63,000 threshold, restoring confidence among sidelined buyers who had waited for signs of stabilization.
Ethereum mirrored the strength, with $ETH climbing roughly 10% to reclaim the psychologically significant $2,000 mark for the first time in over a week, while broader altcoins joined the relief rally in tandem.
Market sentiment had deteriorated sharply throughout most of February, with the widely followed Crypto Fear & Greed Index languishing in "Extreme Fear" territory for an extended stretch a historically meaningful contrarian signal.
Perpetual futures funding rates had repeatedly turned negative during the same period, indicating that short sellers were paying premiums to maintain their positions. Such conditions typically signal an overcrowded trade, leaving markets susceptible to aggressive short squeezes once price momentum shifts direction.
Wednesday's reversal proved precisely that. According to CoinGlass data, approximately $400 million in leveraged bearish positions were liquidated across crypto derivatives markets within the 24-hour rally window, amplifying upside momentum as forced buying cascaded through order books.
Despite the sharp price recovery, bitcoin's perpetual funding rates remain below neutral a nuanced but important signal.
Historically, rallies driven by spot demand rather than leveraged speculation tend to be more sustainable, suggesting the current rebound may reflect genuine repositioning rather than speculative excess.
Traders and analysts will be closely monitoring whether BTC can establish firm support above $68,500 in the sessions ahead.
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