Bitcoin climbed back above $71,000 on Feb. 6 after dropping to just under $60,000 a day earlier, marking a roughly 15% rebound from intraday lows and lifting its market capitalization back above $1.4 trillion. The move came after a sharp selloff that had nearly erased the gains associated with the so-called Trump bump since the 2024 U.S. presidential election. Price action turned quickly after bitcoin briefly traded below the $60,000 level.
Short liquidations accelerated the rebound
The recovery was heavily driven by forced positioning rather than a slow return of spot demand. Data cited in the report shows that more than $120 million in bitcoin short positions were wiped out within one hour as the price surged. Across the wider crypto market, leveraged liquidations topped $1 billion for a second straight day.
That made the rebound highly mechanical. Short covering and liquidations added fuel to the move, amplifying the speed of the recovery once bitcoin started pushing higher.
U.S. stocks also staged a sharp recovery
Risk appetite improved outside crypto as well. The Nasdaq Composite jumped more than 400 points, or 1.86%, to 22,954. The Dow Jones Industrial Average gained 1,000 points, or 2%, while the S&P 500 rose 112 points, or 1.65%. Even with that bounce, the Nasdaq was still down 1.65% over five trading days at the time of writing.
Some analysts had linked Thursday's panic to a U.S. State Department directive telling citizens to leave Iran, but the broader view in the report was that deeper structural pressures mattered more. Kobeissi Letter said the selloff was primarily driven by institutional unloading, noting that hedge funds sold U.S. single stocks at the fastest pace since October.
Trade news and oversold signals shifted sentiment
Observers also pointed to softer labor data and rising skepticism about massive AI capital spending as key forces behind the downturn. By Friday, sentiment changed after the U.S.-Argentina Agreement on Reciprocal Trade and Investment was announced. The deal lowers long-standing trade barriers, expands market access for U.S. motor vehicles and agricultural exports, and sets a framework for critical minerals tied to high-tech and defense industries.
Matthew Sigel, head of digital asset research at VanEck, said the crypto selloff may have approached a “mathematical limit.” He noted that on a continuation chart of bitcoin futures, momentum oscillators including RSI had fallen below 21, an extreme oversold reading that has historically come before stabilization and relief rallies. Sigel also said recent price action has been driven less by the traditional four-year cycle and more by leverage dynamics and institutional positioning.