After enduring weeks of relentless selling pressure, the cryptocurrency market has finally unleashed a powerful “revenge rally.” Bitcoin, the flagship digital asset, aggressively reclaimed ground in the early hours of today (26th), briefly surging past the $69,000 mark – a spectacular climb of over 10% from its Tuesday lows.
Bitcoin’s robust performance ignited a broader market recovery, with major altcoins like Ethereum (ETH), Dogecoin (DOGE), Solana (SOL), and Cardano (ADA) all posting double-digit gains. This widespread resurgence has significantly dampened the aggressive spirits of short-sellers.
Concurrently, cryptocurrency-related stocks, which had faced considerable headwinds during the recent market downturn, also experienced a much-needed reprieve. Stablecoin issuer Circle (CRCL) saw its shares explode by 34% following positive earnings reports. Coinbase (COIN), the largest crypto exchange in the U.S., jumped 14%, while MicroStrategy (MSTR), the public company with the largest Bitcoin holdings, rose 9%. Ethereum reserve company Bitmine (BMNR) also climbed 12%.
Overall, this comprehensive market rebound has provided a temporary emotional reset for investors, momentarily easing the heightened vigilance against the threat of “the next sharp downturn.”
Rapid Rebound! Analysts Warn: Too Early to Call a Trend Reversal
Despite the swift surge in crypto and equity prices, analysts are urging caution, emphasizing that risks have not fully dissipated. Key overhead resistance levels remain to be breached, and prevailing macroeconomic variables suggest the cryptocurrency market may not be entirely out of the woods yet.
Joel Kruger, Market Strategist at LMAX Group, pointed out that while the current rally lacks substantial fundamental catalysts, the pervasive market fear and an overconcentration of short positions created fertile ground for a technical rebound. He explained:
“Crypto assets have been under immense pressure for the past few months, making a technical rebound long overdue. The market had accumulated massive tactical short positions, so even a slight shift in sentiment or news can easily trigger a ‘short squeeze’ – where bears are forced to cover their positions, pushing prices higher.”
However, Kruger also issued a clear warning, stating that it’s premature to interpret this current price action as the beginning of a sustained uptrend:
“Given the suddenness of the rally and the absence of clear triggers – especially with market liquidity currently relatively scarce – investors should maintain a high degree of caution regarding this sharp ascent.”
Market Risk Appetite Heats Up Rapidly
Joshua Lim, Co-Head of Global Markets at FalconX, revealed that his firm’s trading desk has recently observed a notable increase in bullish demand for Ethereum options.
Currently, market capital is heavily concentrated in Ethereum call options (bullish options) and call spread strategies with strike prices ranging from $2,000 to $2,200, expiring in the next 2 to 3 weeks. This indicates a strong conviction that Ethereum has further short-term upside potential.
Lim added that some funds are actively “chasing this rally,” shifting investments towards higher-volatility altcoins and utilizing options to amplify potential returns. This trend signals a rapid resurgence in market risk appetite, stimulated by the recent rebound.
$7.49 Billion in Options Set to Expire
Nevertheless, a significant variable at the end of the month remains a potential concern. This Friday (28th) will see the expiry and settlement of approximately 115,000 Bitcoin options contracts, with a notional value soaring to $7.49 billion.
Jasper De Maere, an OTC Trader at prominent market maker Wintermute, highlighted that the current “max pain” point for Bitcoin options is approximately $75,000. Theoretically, “max pain” can sometimes act like a magnet, drawing prices towards it before settlement. However, he also admitted that the current positioning of market makers is relatively weak, limiting upward momentum:
“From a fundamental indicator perspective, there’s still not enough conviction to suggest this strong rebound possesses sufficient staying power.”
What Price Levels to Watch Next?
From a technical standpoint, Bitcoin faces formidable resistance in the “$70,000 to $72,000 range.” Recent rallies have repeatedly stalled in this area due to increased selling pressure. For this short-term rebound to evolve into a sustained long-term bullish trend, a decisive breakthrough of this resistance zone, supported by significant trading volume, will be the primary challenge for bulls.
Analysts at cryptocurrency exchange Bitfinex are looking even higher, towards the $78,000 mark. This level represents the current “True Market Mean,” an on-chain valuation model that estimates Bitcoin’s fair value based on capital inflows.
Bitfinex analysts emphasize that Bitcoin must consistently close above this price level on a weekly basis for the market structure to genuinely strengthen. Otherwise, it risks remaining trapped in a range-bound environment, repeatedly testing lower support levels.
Disclaimer: This article is intended solely to provide market information. All content and views are for reference only and do not constitute investment advice, nor do they represent the views and positions of BlockTempo. Investors should make their own decisions and trades. The author and BlockTempo will not bear any responsibility for direct or indirect losses incurred by investors’ transactions.
