Bitcoin’s recovery toward the $70,000 level appears to be driven largely by market positioning rather than strong bullish conviction, according to market maker Enflux. The firm said the recent bounce was mainly the result of short sellers covering positions after traders turned bearish following geopolitical developments.
The largest cryptocurrency was trading near $68,000 around midday in Hong Kong, rebounding from a weekend drop that briefly sent prices toward $63,000. Enflux said the initial decline was fueled by concerns surrounding tensions involving Iran, but the market began to recover once it became clear that the situation had not immediately escalated into a broader regional conflict that could disrupt key Gulf trade routes, including those linked to Dubai.
“The market is not pricing catastrophe, but it is not pricing resolution either,” Enflux said in a note, explaining that traders had built significant short positions during the weekend headlines before closing them as the risk of rapid escalation faded.
The firm added that cryptocurrency markets often respond faster than traditional financial assets during geopolitical shocks because they trade continuously and offer investors an immediate outlet for repositioning during periods of uncertainty.
Institutional demand has also provided support for prices. Over the past five trading sessions, spot bitcoin exchange-traded funds have attracted roughly $1.45 billion in net inflows, helping offset recent selling pressure.
On-chain metrics from analytics firm Glassnode suggest that conditions in the market are stabilizing, though conviction remains cautious. Momentum indicators are beginning to recover, with bitcoin’s relative strength index rising to about 41 from around 36 the previous week. However, the indicator remains below the neutral 50 level typically associated with stronger bullish momentum.
Activity in spot markets has also improved. Trading volumes have climbed to approximately $9.6 billion, up from $6.6 billion the week before, while buying and selling pressure has become more balanced, signaling that the earlier wave of aggressive selling is beginning to ease.
Derivatives markets, however, still reflect caution. Glassnode noted that the cost of holding leveraged long positions has dropped significantly, while futures data continues to show sellers dominating buyers, indicating that leveraged traders remain hesitant to rebuild bullish exposure.
Prediction markets are showing similar uncertainty. On Polymarket, the probability of bitcoin falling to $65,000 during March has declined by 11 percentage points to 73%, while the odds of a drop to $60,000 have fallen by 10 points to 41%. A separate contract tracking whether bitcoin reaches $60,000 before $80,000 has also weakened, slipping 12 points to 61%.
Overall, the data suggests bitcoin has found short-term support following its recent decline. However, traders remain reluctant to price in either a sustained rally or a deeper selloff as geopolitical tensions and broader macro uncertainties continue to weigh on market sentiment.
