Bitcoin held the $65,000 support and climbed to a local high of $70,578 before declining slightly. At the time of writing, BTC was trading near $69,951, up 4.31% in the past 24 hours.
The recovery also pushed Bitcoin above its Exponential Moving Average (EMA9) near $68,428, indicating near-term bullish momentum.
Still, analysts pointed to a deeper structural shift in derivatives positioning. CryptoQuant analyst Darkfost noted that leverage in the Bitcoin markets had fallen sharply, signaling a broader market reset.
Bitcoin faces a leverage reset amid prolonged weakness
Global macro uncertainty and recent volatility forced traders to deleverage. That shift was clearly evident in Bitcoins [BTC] Estimated Leverage Ratio (ELR) on Binance.
According to DonkerfostThe ELR has fallen from 0.198 to 0.152 since February. Such sharp declines typically occur after phases of strong volatility.
Source: CryptoQuant
Historically, declining leverage ratios reflect closing positions by traders or forced liquidations. That process reduces speculative exposure and flushes excess debt from the system.
This move was in line with the broader derivatives activity.
Data from Checkonchain showed that Bitcoin Futures Open Interest 7-day Change turned negative, falling from around 4.2 to around -0.6.
Source: Checkonchain
Decreasing open interest usually indicates that traders have closed positions rather than opening new ones. In many cycles, such deleveraging phases stabilize markets before larger price movements occur.
Is the short cover momentum sustainable?
However, the recent upward momentum appeared to be closely linked to short liquidations rather than new capital inflows.
As BTC recovered from the $65,000 dip, more than $115 million in short positions were liquidated between March 9 and 10.
Source: CryptoQuant
This shift caused forced buying as traders closed bearish positions.
Additionally, the Taker Buy/Sell Ratio climbed above 1 two days in a row, indicating stronger aggressive buying in the derivatives markets.
A ratio above one generally reflects dominant buy-side pressure from market participants.
That demand coincided with improving momentum indicators.
Bitcoin’s Relative Strength Index (RSI) rose from 42 to around 51, indicating a strengthening of short-term momentum.
Source: TradingView
This move also pushed BTC above the EMA9 support level, reinforcing short-term bullish sentiment.
Still, the sustainability of the rally remained uncertain.
If BTC were to maintain momentum above the EMA9 near USD 68,400, the next resistance could emerge near USD 74,050.
Failure to hold that level could expose Bitcoin to a new retracement towards the $65,000 support zone.
Final summary
- Bitcoin [BTC] recovered from the $65,000 support and briefly reached $70,578 before stabilizing around $69,951.
- However, the rally appears to be driven partly by short covering rather than new bullish positioning, raising the risk of another pullback.