Bitcoin rebounds from 21-month low as leverage keeps traders cautious

Bitcoin staged a quick rebound Wednesday after sliding to its lowest level in 21 months, giving crypto investors a brief break from a rough year. The move matters because the recovery back near $60,000 came while market data still showed heavy caution and leveraged trading clustered close to current prices.

Cointelegraph reported that Bitcoin traded as high as $60,200 on Wednesday, up about 2.7% over the previous 24 hours, after touching $57,737 earlier in the session. Ether and Solana also rose, gaining 3% and 4.85%, respectively, according to Cointelegraph.

The rebound did not erase the bigger drawdown. Cointelegraph reported that Bitcoin remained down roughly one-third since the start of the year, even after bouncing from its yearly low.

Fear still dominates crypto sentiment

Alternative.me’s Crypto Fear & Greed Index was around 11 out of 100, a reading the tracker labels “Extreme Fear,” according to Cointelegraph. The index is a sentiment gauge that tries to summarize whether traders are acting more fearful or more confident across crypto markets.

That fear is also showing up in fund flows. Cointelegraph reported that US spot Bitcoin exchange-traded funds, or ETFs, have recorded more withdrawals than deposits in recent weeks. ETFs are funds that trade on stock exchanges and hold assets such as Bitcoin, giving investors exposure without directly holding the token.

June brought a reported $4.5 billion in total outflows from US spot Bitcoin ETFs, the largest monthly outflow since the products launched, according to Cointelegraph.

Onchain data told a different story among some longer-term holders. Cointelegraph reported that long-term Bitcoin holders added about 270,000 BTC over the past two weeks. Onchain data refers to activity recorded on a blockchain, which can show how coins move between wallets.

Leverage is the pressure point

The more fragile part of the rebound comes from derivatives data. Cointelegraph pointed to Bitcoin’s funding rate, which stayed positive for three straight days. A funding rate is a recurring payment between traders in perpetual futures, a common crypto derivative that lets traders bet on price moves without an expiration date.

A positive funding rate usually means traders betting on higher prices are paying traders betting on lower prices. Cointelegraph reported that this signaled crowded bullish positioning even as Bitcoin had been falling to new lows.

That setup can make price moves sharper. When traders use leverage, they borrow exposure to control a larger position than their cash balance would normally allow. If prices move too far against them, exchanges can force positions to close, a process known as liquidation.

Hyblock data cited by Cointelegraph showed the largest concentration of leveraged positioning across three major exchanges sat between roughly $57,000 and $60,500 over the past week. That range closely matched Bitcoin’s late-June trading zone.

Cointelegraph reported that positioning thinned above about $61,000 to $62,000 and below about $55,000 to $56,000. In plain terms, the data suggested that forced liquidations were packed near Bitcoin’s current price rather than far away from it.

Cointelegraph said a move above roughly $61,000, or below roughly $56,000, could leave more room for forced position closures to accelerate the next move. The outlet described the next 24-hour view as neutral and said a clearer change in positioning would likely require rising leveraged positioning alongside a rising Bitcoin price, a combination it said had not yet appeared in the data.

This story draws on original reporting from Cointelegraph.