Bitcoin's $60K Rebound: A Leverage Flush or a New Bottom?

The recent price action was a classic leverage flush. On February 5, liquidations exceeded $2.6 billion, with nearly 80% of that tied to long bets. The trigger was Bitcoin's break below the critical $70,000 level, which unleashed a cascade of forced selling across derivatives markets. This mechanical collapse was fueled by extreme leverage, with some traders operating at 50x to 100x multiples during the 2025 rally.

The slide was brutal and swift. Bitcoin posted a sharp single-day slide of roughly 11%–13%, erasing a major portion of its recent gains. This forced selling overwhelmed spot demand, driving the price down to a low of around $64,000 before a partial bounce. The scale of the liquidations was staggering, ranking among the largest one-day wipeouts since the exchange failure crisis three years ago.

The recovery to ~$66K is a technical bounce, not a confirmed bottom. The market is reacting to the extreme overhang of forced selling. Liquidity heatmaps show a key cluster just under $70K, a level that now acts as a magnet for price. A clean break below that zone would remove a source of forced buying and likely accelerate the slide toward the $60,000s. This is a de-leveraging and rotation, not a reversal.

The Flow of Capital: ETFs and Derivatives

The capital flow picture confirms a de-leveraging and rotation, not a bullish reversal. The most telling signal is the $272 million net outflow from U.S. spot Bitcoin ETFs in a single session. This marks a clear shift from the aggressive accumulation phase to risk-management selling and profit-taking. The tone has changed, with money moving out of the core Bitcoin wrapper.

Within that broad outflow, a key outlier shows consolidation. While most funds saw redemptions, iShares Bitcoin Trust (IBIT) recorded about $60.03 million of net inflows. This pattern-where large accounts rotate into the deepest, cheapest, and most scalable vehicle during volatility-is a classic sign of institutional repositioning, not a full exit from the asset class.

The derivatives market echoes this caution. Futures open interest is flat near 527,850 BTC, signaling constrained demand for upside leverage. More critically, the options skew hit 20%, a level that signals extreme fear of another liquidation wave. This flow pattern shows capital is being re-cut and re-allocated, not simply fleeing to cash.

Catalysts and Risks: What to Watch

The immediate technical battleground is the $68,000 to $70,000 zone. This cluster of prior trading activity and long-term holder cost bases acts as a key magnet. A sustained break below $70,000 would remove a critical source of forced buying from liquidations, raising the risk of a faster flush toward the $60,000s. The recent $2.6 billion liquidation event on February 5 proved how quickly this level can trigger a cascade.

Monitor spot ETF flows and derivatives open interest for signs of capital rotation back into the asset class. The prior $272 million net outflow from U.S. spot Bitcoin ETFs signals risk-management selling. A reversal in that flow, particularly if concentrated in the deepest vehicles, would indicate a shift in sentiment. Similarly, a rise in futures open interest from its flat 527,850 BTC level would show renewed demand for leverage.

The options skew remains a high-wire indicator. With the skew hitting 20%, traders are pricing in extreme fear of another liquidation wave. This caution will persist until price action stabilizes above the $70K zone and flows turn positive. For now, the setup is one of mechanical pressure and low leverage demand.