Bitcoin moved back above the $71,000 mark on Monday, recovering from recent weakness as market sentiment indicators across the cryptocurrency sector plunged to their most pessimistic readings on record. The rebound followed a sharp deterioration in trader confidence, with several sentiment gauges flashing levels historically associated with panic-driven selling and potential short-term price stabilization across risk assets. While some analysts believe extreme fear conditions could help Bitcoin defend its yearly lows near $60,000, others remain cautious, warning that fragile market structure may still expose prices to further declines. Oversold Signals Point To Potential Relief Rally MN Capital founder Michaël van de Poppe said Bitcoin is displaying sentiment and momentum readings that have previously coincided with major market bottoms during past downturns. He noted that the Crypto Fear & Greed Index dropped as low as 5 over the weekend, with the final recorded reading at 7, marking the lowest sentiment level ever observed. Van de Poppe added that Bitcoin’s daily relative strength index has fallen to 15, signaling deeply oversold conditions not seen since the 2018 bear market and the March 2020 pandemic crash. Such conditions, he argued, may allow Bitcoin to stage a recovery phase rather than immediately retesting the $60,000 level, provided selling pressure begins to ease in the coming sessions. Liquidation Data Suggests Upside Pressure Data from CoinGlass appears to support the possibility of a short-term rebound, showing a significant imbalance between potential upside and downside liquidations in the derivatives market. More than $5.45 billion in cumulative short liquidations sit above current prices if Bitcoin rises by roughly $10,000, compared with around $2.4 billion in liquidations near $60,000. This disparity suggests that any upward move could force short sellers to close positions rapidly, potentially amplifying price gains through a cascade of liquidations and momentum-driven buying. Structural Weakness Keeps Risks Elevated Despite improving sentiment indicators, broader market structure remains fragile, with CryptoQuant data showing Bitcoin trading well below its 50-day and 200-day moving averages. The price remains far beneath these long-term trend levels, reflecting a corrective repricing phase rather than a confirmed trend reversal following the earlier rally. CryptoQuant’s Price Z-Score is also negative at minus 1.6, indicating Bitcoin is trading below its statistical mean, a condition often linked to prolonged consolidation periods. Analyst Darkfost highlighted growing selling dominance in derivatives markets, noting sharply negative monthly net taker volume and declining buy-sell ratios on major exchanges. Adding longer-term caution, investor Jelle observed that prior Bitcoin bear market bottoms often formed below the 0.618 Fibonacci retracement, which currently sits near $57,000.
