Bitcoin rebounds after sharp losses as the market assesses technological and trade risks

The equity market rebound was led by large-cap technology companies, helping to improve overall risk sentiment. In this context, the correlation between Bitcoin and major stock indices once again became evident. When risk appetite increases in equity markets, the crypto market often benefits from speculative flows seeking higher returns in high-volatility assets.

Despite this rebound, the broader backdrop remains challenging. Bitcoin is still down nearly 50% from its all-time high reached in October, when it surpassed $126,000. Since then, the market has gone through a prolonged corrective phase, marked by capital outflows from spot ETFs, reduced institutional activity, and a significant decline in trading volumes across exchanges.

Retail demand has also weakened compared to the surge seen during the final stretch of the previous bull run. Participation indicators point to lower speculative interest, while large holders have maintained a more defensive stance. This combination has limited the market’s ability to sustain broader and more consistent rebounds.

On the macroeconomic front, the market reacted to recent remarks by President Donald Trump during his State of the Union address, in which he reaffirmed his intention to impose new tariffs under an alternative legal framework, despite legislative constraints. Although there were no direct references to cryptocurrencies, the tightening trade environment continues to fuel global uncertainty and weigh on appetite for higher-risk assets.

Trade tensions, combined with volatility in U.S. Treasury yields and intermittent dollar strength, create a mixed backdrop for Bitcoin. When the dollar strengthens and real yields rise, alternative assets such as cryptocurrencies tend to face additional pressure, as their relative attractiveness compared to traditional instruments diminishes.

Another key factor is the performance of the technology sector, particularly corporate earnings from companies linked to artificial intelligence, such as NVIDIA. Given the recent high correlation between the Nasdaq and Bitcoin, any positive earnings surprise or improved outlook could extend the bullish momentum. Conversely, signs of a slowdown in tech investment could reignite caution.

From a technical perspective, the $70,000 level stands out as a key psychological resistance in the short term, while the area around $62,000 remains immediate support. Bitcoin’s ability to consolidate above this support will be crucial in determining whether the current move marks the beginning of a broader recovery or merely a technical rebound within a larger corrective trend.

In conclusion, Bitcoin is showing signs of recovery after a period of sharp declines, supported by improved sentiment on Wall Street and short-term tactical buying. However, structural demand weakness, global trade uncertainty, and sensitivity to technology-sector movements suggest the market remains fragile. The sustainability of the rebound will largely depend on macroeconomic developments and the performance of risk assets in the coming weeks.

Written by Antonio Di Giacomo, Senior Market Analyst at XS.com