On February 6, 2026, bitcoin staged a dramatic 15% rebound from an intraday low just below $60,000 to reclaim the $71,000 level, restoring its market capitalization to over $1.4 trillion. The reversal halted a harrowing selloff that had virtually erased all gains from the so-called “Trump Bump” following the 2024 U.S. presidential election, breathing life back into a market teetering on the edge of a structural bear cycle.
Short Squeeze Mechanics: $120M in BTC Shorts Obliterated
The rebound was driven by a powerful short squeeze. Data reveals that more than $120 million worth of bitcoin short positions were liquidated in a single hour as the price surged. For the second consecutive day, total leveraged liquidations across the crypto market exceeded $1 billion. The forced covering of bearish bets created a cascade of buying pressure, amplifying the upside move.
U.S. equity markets also mounted a fierce counterattack. The Nasdaq composite surged over 400 points, or 1.86%, to 22,954, led by recovery in major tech names. The Dow Jones Industrial Average rocketed by 1,000 points (+2%), while the S&P 500 gained 1.65% (+112 points). However, the Nasdaq remained down 1.65% over the trailing five trading days, indicating lingering caution.
Institutional Unloading and AI Skepticism: The Real Drivers
Some analysts pointed to the U.S. State Department’s directive for citizens to leave Iran as a catalyst for Thursday’s panic. Yet broader consensus suggests structural factors were at play. Experts at the Kobeissi Letter noted that hedge funds sold U.S. single stocks at the fastest rate since October, signaling institutional deleveraging. Cooling labor data and mounting skepticism over massive artificial intelligence (AI) capital expenditures added to the downward pressure.
Sentiment shifted decisively on Friday following the announcement of the U.S.-Argentina Agreement on Reciprocal Trade and Investment. The landmark deal lowers long-standing trade barriers, provides unprecedented market access for American motor vehicles and agricultural exports, and establishes a framework for critical minerals vital to high-tech and defense sectors. This fresh tailwind helped stabilize U.S. industrial stocks and broader markets.
RSI Falls Below 21: A Mathematical Limit?
Matthew Sigel, head of digital asset research at VanEck, observed that the crypto carnage may have reached a “mathematical limit” as technical indicators hit historic distress levels. “On a continuation chart of Bitcoin futures, momentum oscillators such as the RSI have fallen below 21 — an extreme oversold level that has historically preceded periods of stabilization and relief rallies,” Sigel said. He emphasized that while many investors remain anchored to the four-year cycle framework, recent price action has been driven more by leverage dynamics and institutional positioning than by cycle timing.
The combination of a massive short squeeze, easing geopolitical tensions, and a positive macro trade deal has provided a strong foundation for bitcoin’s short-term bottom. Whether this rebound can extend into a sustained uptrend will depend on institutional positioning and global liquidity conditions in the weeks ahead.