Bitcoin returns to $70k, is the market betting that the worst is over?

Original author: ChandlerZ, Foresight News

During the Qingming Festival holiday, A-share and Hong Kong stocks are closed, but Bitcoin trading never stops.

Starting April 6, BTC started from an early Asian-session low of $67,400, surged to break above $70,300 during the day, reaching the highest level since March 26, up more than 4% from that day’s low. In the same period, Ethereum rose from around $2,050 to $2,170, for a gain of about 6%. When the U.S. stock market closed, it was still maintained above $2,140, with a nearly 4% gain over 24 hours.

CoinGlass data shows that over the past 24 hours, the total liquidation across the entire market was about $229 million, including $127 million liquidated on short positions and $102 million liquidated on long positions. When BTC broke above $69,000, around $136 million in short positions were concentrated near $69,863, and the breakout directly triggered a large-scale short liquidation.

Holiday-market moves are dominated by the Middle East situation

The macro logic driving this round of gains remains Iran, but the storyline has new changes.

On March 21, Trump had given Iran a 48-hour deadline, demanding the reopening of the Strait of Hormuz, but then extended it by more than a week and instead announced the launch of diplomatic talks. Over the following weeks, he went back and forth between “reopening the strait after reaching an agreement” and “reopening the strait does not require an agreement,” and the market rose and fell following each headline. The second final deadline he set was on the evening of April 7 at 8 p.m.; this time the wording was upgraded—if there is no agreement by then, Iran will “live in hell,” and he also threatened to strike energy infrastructure and civilian targets.

Meanwhile, U.S. Defense Secretary Hegseth announced at the April 7 press conference that that week would see the largest-scale airstrikes since actions began against Iran. But in the same press conference, Trump also said there are constructive, willing negotiation participants in Iran, and revealed that the U.S. and Iran are discussing a two-phase plan: first, a 45-day temporary ceasefire, then negotiations for a comprehensive agreement. Iran, for its part, publicly rejected the temporary ceasefire, insisting on demanding a permanent end to the war, leaving the talks in a stalemate.

When asked whether the war is being gradually wound down, Trump’s answer was: “I don’t know, I can’t say. It depends on what they (Iran) do.”

Under this macro backdrop, international markets also saw back-and-forth fluctuations.

WTI May crude futures closed at $112.41 per barrel, hitting new highs for the second consecutive trading day since June 2022; Brent futures were at $109.77 per barrel. Crude oil, after touching as high as $115.48 in intraday Asian trading, then repeatedly swung, reflecting a sharp split in the market over whether the Strait of Hormuz can sustain navigation.

In U.S. equities, the S&P 500 closed up 0.44%, the Nasdaq closed up 0.54%, and both reached new highs of at least two weeks. Chip stocks rose more than 1%, with Micron and SanDisk up more than 3%. VIX was 24.15, slightly higher than the day before.

This combination of oil up, stocks up, and crypto up looks contradictory on the surface, but the underlying logic is consistent: what the market priced that day was not escalation of the war, but the exclusion of the worst-case scenario. News about a 45-day temporary ceasefire helped push the tail risk of a systemic breakdown temporarily out of view. Risk appetite rebounded collectively, and the three asset classes all rallied in the same direction. Oil prices staying elevated is because the Strait of Hormuz has not yet restored navigation, but prices are not accelerating higher—meaning the market found a temporary equilibrium point that is “not worse,” but still not “good.”

Interactive Brokers chief strategist Steve Sosnick commented that the market “sees the carrot and also sees the stick. On the one hand, it’s ceasefire talks; on the other hand, it’s continued bombing. Aside from a brief fluctuation early in Trump’s remarks, investors clearly still hope that hostile actions won’t rapidly escalate.”

It’s worth noting that this pattern has held since the Iran conflict began. From the start of the conflict on February 27 through April 3, in the list of excess returns relative to the S&P 500, the top four were: MSCI Global Energy (+13.0%), Ethereum (+11.3%), the U.S. energy sector (+10.8%), and Bitcoin (+7.0%).

Conversely, the performance of traditional safe-haven assets has been surprising: gold fell 7.1% versus the S&P 500, and silver dropped 17.8%, completely opposite to the market inertia of “buying gold for safety” seen in past rounds of geopolitical conflicts.

On-chain structure improves, but new capital hasn’t caught up

Glassnode’s report shows that the internal structure of this rebound has begun to show repair signals: momentum strengthening, spot demand trending toward stability, and overall losing positions in the market noticeably decreasing.

The spot market reflects early signs of a rebound in demand. Spot CVD flipped from -$48.0 million to +$27.9 million, turning net sell pressure into net buy pressure. The Relative Strength Index (RSI) rebounded strongly, spot CVD (change in spot CVD after subsidies?—note: CVD) turned positive, indicating that buyer enthusiasm has been reignited. But the decline in trading volume suggests market participation is still relatively low. This implies the recovery momentum looks good, but it hasn’t been fully confirmed yet.

Position adjustments in the derivatives market are not large. Open interest decreased, long capital cooled off, indicating lower leverage and a more balanced market environment. Perpetual contract CVD rebounded sharply from -$412 million to $461 million. In the futures market, the directional stance of buyers was clear. Open interest fell from 30.3 billion to 29.7 billion, and there’s no sign of excessive leverage buildup.

ETF fund flows show a clear improvement. Weekly net outflows from U.S. spot Bitcoin ETFs narrowed sharply from -$405 million to -$22 million, a decline of nearly 95%. ETF MVRV rose from 1.10 to 1.16, and unrealized gains for institutional holdings expanded.

But the recovery in on-chain fundamentals still lags. The change in realized market cap fell further from -0.6% to -0.7%, meaning new capital has not yet flowed back in a large way. Hot Capital Share dropped from 21.0% to 20.1%, showing continued outflow of short-term speculative capital. 25-Delta skew rose to 16.88%, and option markets’ pricing of downside risk has not eased despite the price rebound.

Crypto market next steps

Can the rally continue? Institutional views are divided.

CoinDesk, citing analysts’ opinions, says that unless Bitcoin can reclaim $75,000, the risk of selling off to lower levels still exists. If the current price cannot hold above $70k, it will face renewed pullback pressure after short-term holders’ confidence is eroded.

Glassnode’s conclusion is more cautious. It says the rebound momentum has improved, spot demand has stabilized, and losses/ selling pressure have clearly decreased. But participation remains soft across multiple dimensions—on exchanges, in ETFs, and on-chain—which suggests market confidence has not fully returned. To keep this rally firmly in place, it needs follow-through in trading volume, capital inflows, and network activity.

April 7 is the final deadline set by Trump. Whether the situation sees a substantive downgrade after the deadline will directly determine the next direction for crude oil prices and risk assets, and it will also be a key variable for whether Bitcoin can hold $70k.