Cryptocurrency Market Midday Analysis: Technical Rebound After Sharp Drop, Bearish Sentiment Unchanged

On February 25, 2026, the cryptocurrency market experienced a rapid rebound after a significant decline the previous day. Bitcoin quickly surged from an early low of $63,913 to a high of $66,300, currently trading at $66,029, up approximately 3% intraday; Ethereum also recovered to around $1,919, up about 4%. However, this rebound mainly resulted from short-term oversold conditions and short covering, and the overall market remains in "defensive mode," with bearish sentiment still prevailing. In the past 24 hours, total liquidation across the network reached $364 million, with over 126,000 traders liquidated. Market sentiment is in extreme fear.

Market Overview and Key Data

Mainstream Coin Performance: Bitcoin rebounded quickly after falling below $63,000, reaching a high of $66,306. The 24-hour volatility was significant, with price swings between $63,913 and $66,300. Ethereum showed relative weakness, briefly falling below $1,880 support in the morning, then rebounding above $1,900.

Capital Flows: The US spot Bitcoin ETF has experienced net outflows for the sixth consecutive trading day, with a total outflow of over $2.4 billion so far in February, setting a record for daily net outflows since its launch. Large-scale institutional withdrawals have become a core driver of the price decline, creating a vicious cycle of "capital outflow - price decline - liquidation - further selling."

Contract Market: Over the past 24 hours, total crypto contract liquidations reached $364 million, with over 126,000 traders liquidated. Long positions accounted for over 72% of liquidations. During the 4-hour market rebound, liquidations totaled $129 million, with $125 million from short positions, indicating a large number of shorts being forcibly closed during the rebound.

Market Drivers Analysis

Macroeconomic Negative Resonance: Trump’s 10% global tariff policy officially took effect, while the timetable for a 15% tariff remains undecided. The White House bypassed Congress using Section 122 of the Trade Act, extending the tariff framework for 150 days. The tightening of tariffs has triggered global market turbulence, prompting capital to rapidly withdraw from high-risk assets, with cryptocurrencies bearing the brunt.

Federal Reserve Policy Expectations: Chicago Fed President Goolsbee publicly stated that current inflation "is not yet good enough," and while tariff rulings help cool inflation, risks of rebound remain. He implied the Fed is unlikely to cut rates urgently in the short term. Market expectations for rate cuts have further cooled, with the probability of a June cut decreasing, making short-term liquidity support for the crypto market unlikely.

Geopolitical Risks: Trump expressed support for Israel’s airstrikes on Iran, escalating Middle East military tensions and geopolitical concerns. Some investors are selling crypto assets to hedge risks. Meanwhile, German Chancellor Mertzs is leading a "large business delegation" to China today, and uncertainties in the global geopolitical landscape are affecting market risk sentiment.

Regulatory Developments: The Fed has initiated a 60-day public consultation on a new proposal to permanently remove "reputational risk" from banking regulations, explicitly stating that clients engaged in legitimate activities, including crypto firms, should not be penalized or banned due to "reputational risk." This aims to alleviate de-banking in the crypto industry and foster a more friendly regulatory environment.

Technical Analysis

Bitcoin Technicals: Daily chart shows a significant gap down, with Bitcoin breaking through key support levels at $65,000, $64,000, and $63,000. Moving averages are in a strongly bearish arrangement, and MACD is sharply below zero, indicating sustained bearish momentum. The 4-hour chart shows a one-sided plunge with weak rebounds, increased volume, and heavy short liquidation, signaling strong short pressure and exhausted bullish capacity.

Key Levels: Support levels for Bitcoin are at $62,700, $62,000, and $60,000; resistance levels are at $63,500 and $65,000. Ethereum support levels are at $1,860, $1,850, and $1,800; resistance at $1,890 and $1,920.

Market Structure: The largest holding group currently consists of "strong holders" who bought at high levels and are trapped. The market lacks new capital inflows. Although funding rates have turned positive, data from major CEXs and DEXs still show a bearish outlook, with most altcoins in negative funding, indicating market sentiment has not truly warmed.

Trading Strategy Recommendations

Overall Approach: The current market is in an extreme pattern of "dual negative resonance + technical breakdown + panic selling." The core principles are "light positions, strict stop-loss, avoid fighting the trend, no bottom fishing." Be cautious during rebounds, with high short positions at key levels and strict stop-losses.

Aggressive Strategy (Counter-Rally): Suitable for traders with higher risk tolerance. Lightly attempt long positions in Bitcoin around $64,200-$64,500, with stops below $63,800, targeting $65,800-$66,200. For Ethereum, try longs around $1,860-$1,880, with stops below $1,830, targeting $1,920-$1,950. Note that the trend is still downward; betting on a rebound is risky and may result in "catching falling knives."

Conservative Strategy (Right-Side Trading): Suitable for most investors. Stay on the sidelines, wait for clearer signals, and avoid participating in current volatility. Wait for a significant breakdown of key supports (e.g., Bitcoin below $60,000) to short, or wait for volume breakout and stabilization above resistance to go long. While this may miss small rebounds, it reduces the risk of being caught in uncertain trends, ensuring better capital safety.

Trend Trading: When Bitcoin rebounds to $63,200-$63,500, consider small short positions (5%-8%), with stops at $64,500, targeting $62,700. If broken, reduce positions and pursue shorts down to $62,000. For Ethereum, short in the $1,880-$1,890 range with similar position sizing, stops at $1,920, targeting $1,860.

Risk Alerts and Market Outlook

Short-term Risks: Trump will deliver the State of the Union address at 10:00 AM Beijing time today, covering tariffs, living costs, immigration, and geopolitics. Any signals of further tariff tightening or hawkish trade policies could trigger another crypto market plunge. Also, closely monitor US stocks and the dollar index, which is approaching multi-week highs and continues to suppress crypto performance.

Medium-term Outlook: Analysts predict Bitcoin may face a "large-scale wipeout" and fall toward $55,000. Persistent selling pressure could target the $53,000-$55,000 range. Bitcoin has experienced six consecutive weeks of decline since May 2022; $60,000 remains a critical support. A break below could lead to further declines toward approximately $55,000.

Positive Signals: Despite short-term volatility, some positive signs remain. Dragonfly, a crypto venture capital firm, believes the current correction is a normal market adjustment and not replaced by AI sectors. The supply of stablecoins has increased by 50% year-over-year, indicating ongoing capital inflows into the crypto ecosystem. The Hong Kong Monetary Authority plans to issue the first stablecoin licenses in March, providing a compliant development path for the industry.

The midday rebound in the crypto market today is a technical correction after a sharp decline, not a trend reversal. Under the resonance of multiple negative factors such as Trump’s tariff policies, continuous ETF outflows, and hawkish Fed statements, the overall market remains in a bearish, defensive mode. Investors should stay highly cautious, strictly control positions and risks, and avoid blind trading in uncertain trends. In the short term, watch key resistance levels at $66,500 for Bitcoin and $1,950 for Ethereum. If these cannot be effectively broken, the market may test lower supports again. In the medium to long term, the market needs macroeconomic improvements and institutional capital inflows to confirm a true bottom.