Ether and Majors Rise as Bitcoin Rebounds to $76,000 But the Bounce May Not Last

Bitcoin rebounded from a 14-month low of $74,604 on Monday to trade above $78,000 on Tuesday. The 5% recovery was limited by resistance levels formed since early February. Traders and analysts remain cautious about the sustainability of the bounce given the broader bearish trend according to analysis.

The crypto market capitalization increased by 1.7% to $2.65 trillion over 24 hours. While this is a positive development, the momentum has slowed, with the market facing a key resistance at $2.65-2.68 trillion. Analysts note that this level has acted as a cap for several weeks.

Investors have been taking a defensive stance. Global crypto investment products saw $1.696 billion in outflows last week. Bitcoin funds accounted for $1.321 billion of these outflows, while Ethereum funds lost $308 million. Long-term Bitcoin holders have moved into unrealized losses, signaling a heightened bearish sentiment.

Why Did the Market Rally Fail to Sustain?

The rebound in Bitcoin and ether was fueled by broader risk-on sentiment and support from major players. However, thin liquidity and heavy liquidations during early-week volatility limited the strength of the recovery. Long positions were hit hard, with $287 million in BTC longs and $267 million in ETH longs being liquidated.

Analysts highlight that Bitcoin’s technical breakdown is a major concern. The price dipping below key psychological levels like $80,000 and failing to hold the 50% Fibonacci retracement level has reinforced bearish sentiment. This has triggered defensive positioning, especially among institutional investors.

Corporate Ethereum holders have also seen significant losses. BitMine, the largest ETH holder, has posted $6.95 billion in paper losses as the price of Ethereum has fallen. Institutional investors have started reducing their positions.

What Are Analysts Watching Next?

The broader market remains underpinned by macroeconomic risks. These include geopolitical tensions, fears of a U.S. government shutdown, and the slow-moving crypto regulations. Analysts are closely monitoring Bitcoin’s ability to reclaim key resistance levels, such as $80,000 and the 50% Fibonacci level at $82,602.

On-chain data suggests that positioning is shifting toward defensive strategies. Long-term Bitcoin holders moving into unrealized losses indicate an 'extremely bearish' market phase, according to CryptoQuant. This condition is often seen before local market bottoms and could signal a deeper correction if the trend continues.

The options market is also showing early signs of positioning for a potential stabilization. While the bearish narrative remains strong, some analysts suggest a short-term countertrend rally could provide bulls with a brief reprieve. A recovery toward $80,000 and beyond would require a significant shift in sentiment and improved macroeconomic conditions.

Investors are also watching for regulatory developments. The CLARITY Act, which could provide regulatory clarity for the crypto market, has seen reduced chances of passage in recent weeks. Analysts believe that any positive momentum generated by regulatory clarity is likely to benefit altcoins more than Bitcoin.