Bitcoin mounted a sharp recovery during Wednesday’s U.S. session, climbing back above $68,500 and gaining more than 6% over the past 24 hours as heavily skewed bearish positioning across the crypto market began to unwind.
The rebound sparked a broad-based rally in altcoins. Ether (ETH) surged 10%, reclaiming the $2,000 level for the first time in a week. Solana (SOL), dogecoin (DOGE), cardano (ADA) and chainlink (LINK) each advanced by double digits, outperforming bitcoin and the wider CoinDesk 20 Index.
With the latest move, BTC has fully reversed the early-week drop that saw prices briefly dip below $63,000. The turnaround follows an extended stretch of pessimism. The Crypto Fear & Greed Index has hovered in “Extreme Fear” territory for most of February, underscoring the depth of negative sentiment prior to the bounce.
Derivatives markets had reflected that bearish bias. Perpetual futures funding rates — recurring payments between long and short traders — turned negative multiple times in recent weeks, meaning short sellers were paying longs to maintain positions. Such crowded bearish trades often create conditions ripe for short squeezes when prices begin to rise.
Over the past 24 hours, nearly $400 million in leveraged short positions have been liquidated across crypto derivatives markets, according to CoinGlass data. Despite the rally, bitcoin’s perpetual funding rates remain slightly below neutral, indicating the move is not being driven by aggressive leveraged long exposure.
Crypto equities advance
The rebound extended to crypto-related stocks. Stablecoin issuer Circle (CRCL) jumped 29% after reporting stronger-than-expected earnings. Coinbase (COIN) rose 13%, while bitcoin treasury firm Strategy (MSTR) and digital asset investment firm Galaxy (GLXY) gained between 7% and 8%.
Bitcoin miners, which have increasingly traded alongside AI infrastructure themes, lagged slightly. Bitfarms (BITF) and MARA Holdings (MARA) posted gains of around 6%–7%.
According to Markus Thielen of 10x Research, many crypto-linked equities had accumulated sizable short interest from hedge funds, positioning them for a sharp reversal as sentiment improved.
Risk appetite improves
A stronger tone in traditional markets provided additional support. The S&P 500 climbed 0.7% in early trading, while the Nasdaq 100 added 1.2%. The software sector, previously pressured by AI-related concerns, extended its rebound, with the iShares Expanded Tech-Software Sector ETF (IGV) rising another 2% during the session.
There are also signs that U.S.-based buyers may be returning to the crypto market. The Coinbase Premium Index — which measures the price gap between bitcoin on Coinbase and global exchanges — has turned positive for the first time in more than 40 days, a development often interpreted as a signal of renewed U.S. institutional demand.
Meanwhile, the year-to-date performance ratio between Strategy (MSTR) and BlackRock’s spot bitcoin ETF (IBIT) is up 12%, indicating that equity investors continue to favor higher-beta exposure even as bitcoin remains down roughly 25% this year.
Further bolstering the recovery narrative, U.S. spot bitcoin ETFs recorded $257.7 million in net inflows on Tuesday — the largest single-day total since Feb. 6.
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