More than $246 million in crypto futures positions were wiped out in a single day as Bitcoin reversed sharply on Thursday, punishing traders who had bet against the market.
The leading cryptocurrency climbed back to around $73,300 – a gain of roughly 4.5% over 24 hours – after a period of selling dragged prices into the high $60,000 range.
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This move had the hallmarks of a short squeeze. Funding rates had turned deeply negative in the days before the reversal, a sign that bearish bets had piled up on the stock markets. As prices moved higher, these positions were forced to close. Volume increased and the rally fueled itself.
Buyers enter ahead of major resistance
Bitcoin was trading around $71,500 before buyers moved in. Reports from trading data company TradingView placed the price at around $72,900 at the time of publication.
The recovery took place against the backdrop of a return of broader risk appetite in the financial markets S&P500 booking gains and softening the US dollar – conditions that have historically drawn money into alternative assets like Bitcoin.
The institutional question also played a role. Inflows into spot-traded Bitcoin funds helped put a floor under prices during earlier sell-offs this year, keeping losses smaller than they otherwise would have been.
That dynamic marks a notable shift from previous cycles, when Bitcoin often moved in lockstep with stocks during periods of stress.
Geopolitical tensions in the Middle East added a layer of uncertainty throughout the week, but Bitcoin held firm, a fact traders pointed to as evidence of broader market acceptance of the asset.
Open interest remains elevated at $48 billion
The derivatives market remains tense. Open interest on the major exchanges was nearly $48 billion, according to data collected from Mint glasswith CME Bitcoin futures alone worth approximately $7.9 billion – or approximately 110,000 BTC.
Positioning had shifted to call options ahead of the move, suggesting some traders had already expected a rise.
That level of open interest works both ways. It reflects the strong participation and genuine conviction of both retail and institutional traders.
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But it also means the market remains vulnerable to sharp swings when headlines change quickly. A single piece of macro news – a Signal from the Federal Reservean escalation abroad, a change in policy – could quickly change the mood.
Bitcoin has, at least partially, shed its old reputation as a purely risky business. Proponents increasingly view it as a store of value in environments where governments spend freely and currencies weaken.
Whether that framing remains under pressure remains an open question, but Thursday’s recovery did little to discourage those who believe in it.
Featured image from Pexels, chart from TradingView