After experiencing an extreme drop of 50% from its all-time high, Bitcoin rebounded strongly on Friday, rising as much as 18% in a single day and regaining the $70,000 mark. However, despite the technical recovery, the weekly decline still exceeded 15%, indicating that market confidence has not fully recovered. This volatility not only reflects the return of speculative funds but also reveals the chain reaction following the market liquidity crunch and leverage cleanup.
Bitcoin extreme volatility and technical rebound
Bitcoin rebounded quickly after hitting support at $60,000 early Friday morning, climbing as high as $71,000 in the evening, a gain of up to 18%. Professional investors viewed this as a "relief bounce," primarily because the continuous selling pressure had exhausted short-selling momentum. Nevertheless, compared to the previous week's high of $84,000, the market remains in a significant correction phase. Analysts point out that the $60,000 level is currently considered key support, but due to continued cautious market sentiment, a V-shaped reversal is unlikely in the short term, and subsequent price action will depend on the sustainability of buying pressure.
Liquidity gap and risk of leveraged liquidation
According to Kaiko data, current market depth is more than 35% lower than in October 2024, and this low-liquidity environment amplifies price volatility. When the market lacks sufficient order book depth, even a small number of buy or sell orders can trigger sharp price jumps. Furthermore, a staggering $1.3 billion in long positions were forcibly liquidated in the past 24 hours. This chain reaction, against the backdrop of insufficient liquidity, further pushed up implied volatility, surging from 57% to 97%, indicating extremely volatile market expectations for the next 30 days.
Fund Flows and Future Outlook
From a funding perspective, the US Bitcoin spot ETF recorded a net outflow of $434 million on Thursday, reflecting the risk-averse mentality of institutional and retail investors amid uncertainty. Analysts believe that the current market movement is more of a consolidation due to a liquidity crunch than a resumption of a structural bull market. Given the lack of clear macroeconomic or policy support, coupled with the fact that market liquidity has not yet returned to normal levels, the market will continue to face strong downward pressure and volatile fluctuations in the short term. Investors should closely monitor the speed of the recovery in ETF inflows and the extent of market depth restoration.
This article, titled "Bitcoin Rebounds Strongly to 70,000 After Flash Crash, Liquidity Depletion Triggers Extreme Volatility and Leveraged Liquidation," first appeared on ABMedia, a ABMedia .
