Sentiment in the cryptocurrency market remains fragile; even the positive news of the end of the US government shutdown failed to trigger a significant rebound in Bitcoin.

Original author: Ye Huiwen

Original source: Wall Street News

After suffering a massive blow last month that wiped out hundreds of billions of dollars in market value, Bitcoin is struggling to find a rebound, but fragile market sentiment and persistent selling pressure are making any attempt at recovery difficult.

Despite the positive news of Washington ending the government shutdown boosting traditional risk assets, the cryptocurrency market failed to see the expected strong rally, highlighting the lingering unease among investors after massive losses.

The world's largest cryptocurrency briefly broke through $107,000 on Monday but quickly fell back below $105,000. This lackluster price performance contrasts sharply with the rise in stock and credit markets due to the reopening of the US government, indicating that the internal momentum of crypto assets remains insufficient.

According to Bloomberg, Bitcoin's market capitalization has shrunk by approximately $340 billion since the record-breaking liquidations triggered by Trump's unexpected tariff announcement on October 10. The market generally believes that the recent downturn is partly due to early large holders (i.e., "OG whales") taking profits near the year's highs, while the lingering shadow of the massive liquidations in early October also persists.

The weakness is evident across several key indicators. Data measuring market sentiment and leverage levels show that investor enthusiasm is far from recovered. Meanwhile, key resistance levels on technical charts are exerting significant downward pressure on prices, and market participants are divided on the outlook.

Key indicators show insufficient momentum

A series of data points suggest that the driving forces behind Bitcoin's rise have not yet returned. The total open interest in Bitcoin perpetual futures contracts is currently around $68 billion, well below last month's peak of $94 billion, reflecting a significant cooling of speculative interest in the derivatives market. Meanwhile, funding rates, used to measure the cost of leveraged positions, have remained stable, indicating that traders are not actively leveraging long positions.

More noteworthy is the lackluster performance of spot Bitcoin ETFs, a significant source of new funds in the market. According to data compiled by Bloomberg, despite a broad rally in the US stock market on Monday, US-listed Bitcoin ETFs only recorded a net inflow of $1 million. George Mandres, senior trader at XBTO Trading, pointed out that the insufficient new funds represented by ETF inflows are continuing to impact market risk sentiment.

There are many technical obstacles.

From a technical perspective, Bitcoin's prospects also face challenges. Currently, its price is still trading below the 200-day moving average (currently near $110,000), a level widely regarded by analysts as a key threshold for any sustained upward movement.

IG Australia analyst Tony Sycamore stated that prices need to consistently break above the 200-day moving average to "significantly increase confidence in the view that the uptrend has resumed." FxPro's chief market analyst, Alex Kuptsikevich, also observed that the broader cryptocurrency market capitalization is encountering technical resistance at its 50-day moving average around $3.62 trillion. He believes the market may be forming a new, lower local high, continuing the downtrend that began over a month ago.

BTC Markets analyst Rachael Lucas added that $103,000 is a key structural support level. A break below this level could open the way for a drop to $86,000 or even deeper to $82,000 (which aligns with the 100-week moving average), and any move below these areas could reignite selling pressure.

Market opinions are divided: Dead cat bounce or trend reversal?

Market participants are clearly divided in their interpretation of Monday's brief rally. Some see it as merely a temporary respite in the bear market, while others are looking for early signs of a trend reversal.

George Mandres bluntly stated that this rebound "feels like a dead cat bounce." He believes that sentiment in the cryptocurrency space differs from that in the stock market, with significant attention focused on the narrative of early Bitcoin buyers selling large amounts of tokens, and this supply pressure is eroding risk appetite. Alex Kuptsikevich also noted that the market is clearly not ready to shift to "crazy optimism mode," and profit-taking continues after the growth impulse has been realized.

However, some analysts hold a relatively positive view. Tony Sycamore pointed out that the most significant feature of the past 24 hours was that Bitcoin briefly tracked the rise in risk assets after the correlation breakdown last month. He considers this a "positive sign" and, from a technical perspective, suggests that the correction that began from the $126,272 high may have already been completed at the recent low of $98,898.

Rachael Lucas described the recent rally as a "classic short-covering bounce, mixed with some institutional FOMO (fear of missing out)." This view suggests that the current rally is driven more by structural market factors than by a solid return of fundamental confidence.