Crypto market sentiment remains fragile; despite the positive news of the end of the "U.S. government shutdown," Bitcoin has not seen a meaningful rebound
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Crypto market sentiment remains fragile; despite the positive news of the end of the "U.S. government shutdown," Bitcoin has not seen a meaningful rebound
Technically, it remains constrained by the 200-day moving average, with analysts significantly divided over whether the recent rebound is a "dead cat bounce" or a trend reversal, and market sentiment remains fragile.
Navigating Web3 tides with focused insightsAuthor: Ye Huiwen
Source: Wall Street Insights
After suffering a massive market value drop of hundreds of billions of dollars last month, Bitcoin is struggling to rebound, but fragile market sentiment and ongoing selling pressure are making any recovery attempt extremely difficult.
Although the resolution of the U.S. government shutdown boosted traditional risk assets, the cryptocurrency market did not see the expected strong rally, highlighting that investor anxiety following substantial losses continues to spread.
The world's largest cryptocurrency briefly surpassed 107,000 USD on Monday but quickly fell back below 105,000 USD. This weak price performance contrasts sharply with rising stock and credit markets driven by the reopening of the U.S. government, indicating that internal momentum for crypto assets remains insufficient.
According to Bloomberg, Bitcoin’s market capitalization has shrunk by approximately $340 billion since October 10, when record liquidations were triggered by Trump's unexpected tariff announcement. The recent downturn is widely believed to stem partly from early large holders ("OG whales") taking profits near annual highs, while lingering shadows from the large-scale liquidation events in early October continue to weigh on the market.
Signs of weakness are confirmed across multiple key indicators. Data measuring market sentiment and leverage levels show that investor enthusiasm has yet to recover. Meanwhile, key resistance levels on technical charts are heavily压制ing prices, and market participants remain deeply divided over the outlook.
Key Indicators Show Lack of Momentum
A series of data suggest that the driving force behind Bitcoin’s rise has not returned. The total open interest in Bitcoin perpetual futures currently stands at around $68 billion, far below the previous month’s peak of $94 billion, reflecting a significant cooling in speculative interest within the derivatives market. At the same time, funding rates—used to gauge the cost of leveraged positions—remain flat, indicating traders are not aggressively increasing long leverage.
More notably, spot Bitcoin ETFs—key sources of new market inflows—are also underperforming. According to data compiled by Bloomberg, despite broad gains in U.S. equities on Monday, U.S.-listed Bitcoin ETFs recorded only $1 million in net inflows that day. George Mandres, Senior Trader at XBTO Trading, pointed out that insufficient new capital represented by ETF inflows continues to impact market risk sentiment.
Technical Resistance Mounts
From a technical perspective, Bitcoin’s outlook also faces challenges. Its price remains below the 200-day moving average (currently near $110,000), a level analysts widely regard as a critical threshold for any sustained upward move.
Tony Sycamore, Analyst at IG Australia, said the price needs to sustainably break above the 200-day moving average to "greatly increase confidence in the view that an uptrend has resumed." Alex Kuptsikevich, Chief Market Analyst at FxPro, also observed that the broader cryptocurrency market cap is facing technical resistance near its 50-day moving average around $3.62 trillion. He believes the market may be forming a new, lower local high, continuing the downward trend that began over a month ago.
Rachael Lucas, Analyst at BTC Markets, added that $103,000 is a key structural support level. A break below this level could open the door for prices to fall toward $86,000 or even deeper to $82,000 (aligned with the 100-week moving average). Any breach of these zones could reignite selling pressure.
Market Divided: Dead Cat Bounce or Trend Reversal?
Market participants have sharply different interpretations of Monday’s brief rally. Some view it merely as temporary relief within a bear market, while others look for early signs of a trend reversal.
George Mandres bluntly stated that this rally "feels like a dead cat bounce." He believes sentiment in the crypto space differs from equities, with growing attention on narratives of early Bitcoin buyers selling large amounts of tokens—a supply pressure undermining risk appetite. Alex Kuptsikevich also noted that the market clearly isn’t ready to shift into “wildly optimistic mode,” and profit-taking continues even after growth impulses materialize.
However, some analysts hold relatively positive views. Tony Sycamore pointed out that the most notable feature in the past 24 hours was Bitcoin briefly tracking risk asset gains, after a breakdown in correlation last month. He sees this as a "positive sign," and technically suggests that the correction from the high of $126,272 may have already completed at the recent low of $98,898.
Rachael Lucas described the recent rally as a "classic short squeeze, mixed with some institutional FOMO (fear of missing out)." This view implies that the current rally is driven more by structural market factors rather than a solid return of fundamental confidence.
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