Bitcoin held the $65,000 support and climbed to a local high of $70,578 before slowing slightly. At press time, BTC was trading near $69,951, up 4.31% over the past 24 hours.
The rebound also pushed Bitcoin above its exponential moving average (EMA9) near $68,428, signaling near-term bullish momentum.
Nonetheless, analysts have pointed to a deeper structural shift in the positioning of derivatives. CryptoQuant analyst Darkfost noted that leverage in Bitcoin markets has declined sharply, suggesting a broader market reset.
Bitcoin Faces Leverage Reset Amid Prolonged Weakness
Global macroeconomic uncertainty and recent volatility have forced traders to reduce leverage. This change was clearly evident in the estimated leverage ratio (ELR) of Bitcoin (BTC) on Binance.
According to Darkfost, the ELR has increased from 0.198 to 0.152 since February. Such sharp declines generally occur after phases of high volatility.
Source: CryptoQuant
Historically, declining leverage ratios reflect traders closing positions or forced liquidations. This process reduces speculative exposure and removes excess leverage from the system.
The move aligns with a broader derivatives business.
Data from Checkonchain showed that the 7-day change in Bitcoin futures open interest turned negative, from around 4.2 to around -0.6.
Source: Checkonchain
A decline in open interest generally indicates that traders have closed positions rather than opening new ones. In many cycles, these deleveraging phases stabilize markets before larger directional moves.
Is the short sale hedging dynamic sustainable?
However, the recent bullish momentum appears to be closely related to short sell-offs rather than fresh capital inflows.
When BTC rebounded from its $65,000 drop, over $115 million in short positions were liquidated between March 9 and 10.
Source: CryptoQuant
This change triggered forced buying as traders closed their bearish positions.
On top of that, the taker’s buy/sell ratio has climbed above 1 for two consecutive days, signaling more aggressive buying in derivatives markets.
A ratio greater than one generally reflects dominant buying pressure from market participants.
This demand coincided with an improvement in momentum indicators.
Bitcoin’s Relative Strength Index (RSI) rose from 42 to around 51, indicating strengthening near-term momentum.
Source: TradingView
The move also pushed BTC above its EMA9 support level, reinforcing short-term bullish sentiment.
However, the sustainability of the rally remains uncertain.
If BTC maintains its momentum above the EMA9 near $68,400, the next resistance could appear near $74,050.
Failure to maintain this level could expose Bitcoin to another retracement towards the $65,000 support zone.
Final summary
- Bitcoin (BTC) rebounded from the $65,000 support, briefly hitting $70,578 before settling near $69,951.
- However, the rally appears partly driven by short covering rather than new bullish positioning, increasing the risk of a further pullback.
