Bitcoin climbs back to the $70,000 mark after cooling inflation data and an $8.7 billion sell-off.

Bitcoin has pushed back above $70,000 after sliding to nearly $60,000 earlier this month, rising about 5% over the past 24 hours. The broader CoinDesk 20 (CD20) benchmark climbed 6.2% over the same stretch, reflecting a wider recovery across digital assets.

The bounce followed a cooler-than-anticipated U.S. inflation report. January’s Consumer Price Index increased 2.4% year over year, under the 2.5% consensus estimate, fueling expectations that the Federal Reserve could begin cutting rates sooner than previously thought. Prospects of lower borrowing costs typically bolster risk assets by reducing the relative appeal of safer investments.

Traders on prediction platforms are adjusting their outlook accordingly. On Kalshi, the probability of a 25-basis-point rate cut in April has risen to 26%, up from 19% earlier in the week. Meanwhile, odds on Polymarket increased from 13% to 20%.

Even so, sentiment data suggests lingering unease. The Crypto Fear & Greed Index remains in “extreme fear,” a level last seen during the 2022 downturn sparked by the collapse of FTX. The gauge has stayed in that range since the start of the month, signaling persistent caution among investors.

According to analysts at Bitwise Asset Management, roughly $8.7 billion in bitcoin losses were realized over the past week — second only to the market fallout tied to Three Arrows Capital. The firm characterized the recent sell-off as resembling a classic capitulation phase, in which assets move from short-term or weaker holders to longer-term investors with stronger conviction — a process that can eventually support stabilization.

At the height of the downturn, bitcoin treasury firms were facing more than $21 billion in unrealized losses, a record. As prices have recovered, that figure has fallen to about $16.9 billion.

Thin weekend trading volumes may be amplifying the current upswing, with signs of seller exhaustion emerging after last week’s heavy liquidations. Still, fear appears to be the dominant narrative. As Bitwise research analyst Danny Nelson told CoinDesk, the market’s primary driver at present is concern that prices could slide further.

For now, that anxiety is prompting some investors to treat rallies as opportunities to reduce exposure. Whether the transition toward higher-conviction holders will ultimately shift momentum, or if renewed selling pressure will take hold, remains an open question.

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