Bitcoin price has recovered after a recent rapid decline. It is stated that behind this recovery is a wave of liquidations rather than a fundamental increase in demand. According to the weekly market assessment prepared by CryptoQuant, in the decline due to weak order books and concentrated positions, leveraged investors were forced to close positions at a loss. After this move, the market started to rise again, but it is stated that the rise was largely due to the closing of short selling positions.
Reasons for the Short-Term Rise
CryptoQuant emphasized that the short-term recovery in Bitcoin occurred mostly through a mechanical process. It is reported that liquidated positions and short position closings are behind the price increase, rather than a permanent spot demand increase. It was also stated that the recent rise was mostly a corrective move for the health of market transactions and was not supported by new investments.
Emotional Transition: From Fear to Hesitation
There was a shift in the general sentiment axis of the market from fear to timidity. Especially in periods of high fear, sudden increases can be seen due to leveraged transactions. However, CryptoQuant underlined that such increases do not mean a permanent market reversal. The price may go up temporarily; But without sustained demand, stability remains vulnerable.
Macroeconomic Effects and Volatility
The basis of the pressure on crypto assets is macroeconomic conditions. The slowdown in the growth of the US economy, the risk aversion tendency among different assets, and fluctuations in the dollar and real interest rates directly affect the crypto market. It is observed that digital assets act under the same liquidity conditions as other risky assets, not as a hedging instrument independent of traditional financial markets. Leverage-based increases are considered to be far from permanent.
In CryptoQuant’s analysis, it is reminded that any rise without a continuous and strong demand from the spot market should be viewed with caution. Short closing rallies that occur from time to time do not represent a radical reversal in the general trend in the market.
How Can the Market Find Equilibrium?
CryptoQuant emphasizes the need for three basic conditions for the market to achieve a stronger balance:
- Strong and multi-day spot market entries,
- Calm and balanced rebuilding of Leverage,
- The price maintains the regained levels.
It is stated that unless these three conditions are met, the increases will remain temporary and reactive.
As a result, a deep fear environment in the markets can pave the way for sharp short-term rallies. However, according to CryptoQuant, a demand reversal that would change the long-term trend has not yet been observed and the market is mostly testing how seller pressure is met these days.
