Bitcoin rally fizzles out at resistance
Bitcoin staged a powerful rally on Monday, delivering one of its strongest single-day performances in recent weeks.
Nonetheless it struggled to reclaim overhead resistance, with the world’s largest cryptocurrency once again being rejected by it a day later amid escalation in the Middle East.
Monday’s over 4% rally began during the Asian session but gathered real momentum as European and US markets opened. A key catalyst appeared to be renewed institutional demand, reflected in early indications of strong spot ETF inflows following several sessions of more tentative allocation. Market participants had been watching exchange-traded fund (ETF) flows closely after a period of alternating inflows and outflows. Monday’s shift back towards consistent net buying provided a structural underpinning for the rally, reinforcing the perception that larger allocators were re-engaging at current levels rather than merely trading tactically.
Positioning dynamics amplified the strength of the move. In the days leading up to Monday, derivatives data suggested that leverage had been relatively balanced, with funding rates neutral to mildly positive and no extreme long build-up.
US market sentiment also turned more constructive with a JP Morgan analyst suggesting to buy the dip in US stock markets. Risk appetite thus also improved across digital assets, with capital rotating back into large-cap cryptocurrencies. While macro headlines were not the dominant driver, the absence of fresh negative catalysts allowed crypto-specific flows to take centre stage. Bitcoin, as the most liquid and institutionally integrated digital asset, became the primary beneficiary of renewed confidence.
On-chain metrics offered additional reassurance. Exchange balances did not spike into the rally, suggesting that long-term holders were not aggressively distributing into strength. Instead, the move appeared driven by incremental demand layered on top of a relatively tight liquid supply backdrop. Long-term holder supply remains elevated, and the structural reduction in freely circulating coins continues to magnify price responsiveness during demand surges.
Corporate and institutional narratives further supported sentiment. Commentary from asset managers and treasury-focused companies reaffirmed ongoing strategic allocations to Bitcoin, reinforcing the perception that downside risk is increasingly cushioned by structural demand.
Importantly, the rally did not immediately exhibit signs of overheating. While funding rates ticked higher during the session, they remained well below levels typically associated with crowded long positioning. Open interest increased in a measured fashion, indicating fresh participation rather than purely forced liquidation dynamics.
For now, Monday’s rally underscores Bitcoin’s continued ability to generate sharp directional moves when positioning resets and structural demand aligns with technical triggers. The combination of renewed ETF inflows and short-covering momentum helped it reach key technical resistance but this continues to thwart the upside for now.
Whether Monday’s strength evolves into a broader trend will depend on continued inflows and the market’s ability to build on this momentum without slipping back into the prior consolidation range.
Bitcoin bearish case:
Escalation in the Middle East provoked another sell-off, so far to $66,356 on Tuesday.
If fallen through, the 12-to-19 February lows at $65,631.93 – $65,107.17 may be revisited. Further down support may be found between the 24-28 February lows at $63,046.65 – $62,527.40.
Bitcoin bullish case:
As long as Bitcoin trades above its February low at $60,132.75, a recovery may still unfold. For it to become possible, the $70,040.75 – $73,757.39 key resistance zone will need to be overcome.
A rise and daily close above the March 2024 high at $73,757.39 may put the April 2025 low at $74,441 on the map. If also bettered, the March 2025 low at $76,702.93 may be reached as well.
Short-term outlook:
Neutral with a bearish bias while below the 15 February high at $70,961.46 but above the 12 February $65,107.17 low.
Medium-term outlook:
Neutral with a bearish bias while below the March 2024 high at $73,757.39 but above the $56,148.93 mid-August 2024 low; failure there might engage the $50,000 region and the August 2024 low at $49,217.00.