Bitcoin Bounces Back Above $65,000: What’s Behind the Crypto Market’s Unlikely Resurgence?

For the first time in months, Bitcoin is trading comfortably above the psychologically important $65,000 level, a move that has left many veteran traders scratching their heads. After a brutal 40% drawdown from its all-time high of roughly $126,000, the world’s largest digital asset appears to have found its footing, at least for now. The rebound has come despite a chorus of doom-laden headlines, including a recent warning from a “Big Short” investor who flagged a potential “death spiral” that could, in theory, take BTC all the way to zero. Yet here we are, watching Bitcoin flirt with $70,000 once again.

A Pattern That Refuses to Die

According to a fresh note circulated by Bloomberg Intelligence, the latest bounce is not a fluke but rather the continuation of a long-running pattern. Since 2013, Bitcoin has suffered eight separate pullbacks of 30% or more, only to recover and print fresh peaks within 12–18 months. “This pattern underscores Bitcoin’s ability to recover and reach new price peaks despite market volatility,” the analysts wrote. Put simply, the asset has an almost annoying habit of refusing to stay down, a trait that keeps long-term holders glued to their wallets while newer entrants panic-sell every time a regulator sneezes.

The numbers back up the narrative. After each major drawdown, Bitcoin’s subsequent rally has, on average, delivered returns in excess of 250% from the low to the next cyclical top. If history rhymes—even if it does not repeat—then the current move off the 2026 low near $60,000 could still have room to run. Seasoned market watchers caution, however, that past performance is not a guarantee of future results, especially as the macro backdrop grows murkier.

Oversold Technicals Meet Thin Liquidity

Zooming into the short-term charts, Bitcoin’s relative strength index (RSI) spent the better part of January buried below the 30 mark, a level that traditionally signals an asset is deeply oversold. When RSI lingers in that zone for weeks, a relief rally often follows, and that is precisely what we are witnessing now. The snap-back was amplified by unusually thin order-book depth across major exchanges. In plain English, there simply were not enough coins for sale above $62,000, so once a modest wave of buy orders arrived, price jumped quickly to the next available liquidity pocket near $68,000.

Crypto-focused media outlet Barchart summed it up succinctly: “Put together with extremely oversold RSI, Bitcoin appears at the cusp of a sustainable recovery in February.” Of course, sustainability is the key word. A technical bounce can evaporate just as quickly if macro headwinds re-intensify or if a large holder decides to unload coins into the rally.

Whales and Corporates Keep the Faith

While retail traders debate whether the bottom is truly in, large wallets have been quietly accumulating. On-chain data shows addresses holding at least 1,000 BTC—so-called whales—added roughly 60,000 coins to their collective stack since mid-January. MicroStrategy chairman Michael Saylor, never shy about voicing his bullishness, recently told investors that his company is “prepared to purchase more Bitcoin regardless of price.” The software firm already sits on a cache worth billions, so his words carry weight even among traditional fund managers who remain skeptical of the asset class.

Corporate adoption is also widening. Several mid-cap companies in the United States and Europe are now modeling MicroStrategy’s playbook by adding Bitcoin to their balance sheets. If the trend accelerates, it could create a persistent bid underneath the market, similar to how share-buyback programs support equities. For a deeper look at how firms are normalizing crypto treasuries, see our earlier coverage: Normalizing Digital Asset Treasuries: The Future of Corporate Finance.

Fed Policy and Dollar Dynamics

No discussion of Bitcoin’s price trajectory is complete without acknowledging the elephant in the room: Federal Reserve policy. The central bank has signaled it may pause rate hikes sooner than markets expected, a shift that has weakened the U.S. dollar index (DXY) by roughly 3% year-to-date. A softer dollar tends to benefit non-yielding assets such as gold and, by extension, Bitcoin, whose proponents bill it as digital gold. Futures markets are now pricing in a 70% probability that the Fed will cut rates at least once before September, providing a tailwind for risk assets across the board.

Yet the macro picture is far from rosy. Inflation remains sticky in the services sector, and geopolitical tensions from Eastern Europe to the Taiwan Strait could keep energy prices elevated. Should inflation re-accelerate, the Fed may be forced to resume hiking, a scenario that would likely halt Bitcoin’s recovery in its tracks. For this reason, analysts at IG Group advise keeping an eye on the dollar index as well as U.S. ten-year yields, both of which have an inverse correlation with crypto prices.

Altcoins Tag Along, but Risks Linger

Bitcoin’s resurgence has lifted the broader crypto market. Ethereum has reclaimed the $3,300 level, while Solana and Avalanche have each added more than 20% over the past fortnight. Meme coins, the ultimate risk-on gauge, are also flashing green. Dogecoin and Shiba Inu have doubled from their January lows, luring retail traders back into the ecosystem. Still, total open interest in perpetual futures remains below the peaks seen during the October euphoria, suggesting that leverage has not yet returned in full force. That is arguably healthy; lower leverage reduces the risk of the cascading liquidations that amplified last year’s plunge.

Regulatory clouds remain the biggest wildcard. The European Union’s Markets in Crypto-Assets (MiCA) framework enters its final implementation phase this spring, while U.S. agencies continue to pursue enforcement actions against major exchanges. A single court ruling or enforcement notice can wipe billions off the market cap in hours, as we witnessed in 2025 when the SEC sued two leading trading platforms simultaneously. Until there is clearer regulatory guidance, institutional money will likely stay on the sidelines, capping the upside of any rally.

What Could Derail the Recovery?

Even the most ardent Bitcoin evangelists concede that the path forward is fraught with risk. A rapid re-strengthening of the dollar, an unexpected hawkish pivot by the Fed, or an avalanche of forced selling by miners facing high electricity costs could all send price back below $60,000. On-chain analytics firm Glassnode notes that miner balances have declined steadily since December, a sign that some operators are still offloading coins to cover operational expenses. If price stalls near current levels, more miners may be pressured to sell, creating a feedback loop reminiscent of past bear cycles.

Then there is the psychological factor. Bitcoin’s latest rally has restored only a fraction of the wealth destroyed during the drawdown. Many investors who bought above $100,000 are still underwater, and their urge to “get out even” could cap rallies. Each failed attempt to break decisively above $70,000 risks inviting fresh selling, turning what could be a V-shaped recovery into a drawn-out consolidation phase.

The Big Picture: Volatility as a Feature, Not a Bug

Love it or loathe it, extreme volatility has been Bitcoin’s calling card since inception. Rather than viewing the latest round-trip from $126,000 to $60,000 and back toward $70,000 as an anomaly, market historians see it as par for the course. Our earlier article, Bitcoin’s Price Rollercoaster: How Crypto Market Volatility is Redefining Traditional Finance, explores how these wild swings are forcing portfolio managers to rethink correlations, risk budgeting and even the definition of a safe-haven asset.

For now, the bulls have regained the upper hand, but the jury is out on whether the low is truly in. If the Fed stays dovish, whales keep stacking, and no regulatory bombshell drops, Bitcoin could eye the previous high by summer. Conversely, a macro shock or heavy-handed regulation could send it re-testing the $60,000 support. Either way, expect more fireworks. In the world of crypto, the only constant is volatility.