Bitcoin is reclaiming its status as the darling of thrill-seeking speculative traders.
On Friday, Bitcoin recorded its largest gain in nearly three years, nearly recovering all the losses from the cryptocurrency market's plunge on Thursday. The sell-off had at one point pushed Bitcoin down more than 50% from its October high of last year. The sharp swing of about 13% reignited a rise in market volatility, which traders have traditionally favored for its potential profit opportunities.
On Friday, Bitcoin surged by as much as 13% to $71,469. Less than 24 hours earlier, its price had approached the $60,000 mark for the first time since October 2024. Despite this, Bitcoin is still down more than 15% for the week, having closed above $84,000 the previous Friday.
Other smaller, less liquid tokens also rebounded sharply on Friday. Ethereum and Solana both rose 9%, while XRP jumped more than 30%. Bitcoin currently accounts for nearly 60% of the total market capitalization of the $2.38 trillion cryptocurrency market.
Cryptocurrencies have been in turmoil since a series of fierce liquidations last October weakened market confidence. This week, the sell-off intensified as leveraged bets unwound and broader market volatility increased.
Noelle Acheson, author of the "Crypto is Macro Now" newsletter, said: "This feels like a relief rally after the selling wave exhausted itself. Gold and silver also bottomed and rebounded at the same time."
Damien Loh, Chief Investment Officer at Ericsenz Capital, said the rebound from $60,000 indicates "robust support" at that level. However, with market sentiment still cautious, traders should not "expect a rapid rebound."
The wild swings over the past 48 hours highlight a sharp rise in volatility.
According to Kaiko, Bitcoin is experiencing its most intense fluctuations since the collapse of cryptocurrency exchange FTX, with repeated failed rebounds triggering new rounds of forced selling. Market depth remains more than 35% below October levels, a decline last seen in late 2022 after FTX's collapse. In such a low-liquidity environment, even relatively modest fund flows can amplify price swings and trigger more liquidations.
The Bitcoin Volmex Implied Volatility Index—an indicator based on real-time crypto options prices used to reflect market expectations for Bitcoin's volatility over the next 30 days—surged from 57% on Thursday to over 97%.
Pratik Kala, Head of Research at digital asset hedge fund Apollo Crypto, said: "Bitcoin's volatility has doubled compared to last week. Participants like us have realized that this is a moment of blood in the streets and are actively buying in."
According to CoinGlass, approximately $2.1 billion in bullish bets across the entire cryptocurrency market were liquidated in the past 24 hours.
Long-term Bitcoin holders are feeling the pressure. In its earnings report on Thursday, Michael Saylor's MicroStrategy confirmed a net loss of $12.4 billion in the fourth quarter due to the markdown of its massive holdings. Nevertheless, MicroStrategy's stock price still rose 26% on Friday as Bitcoin rebounded.
Fabian Dori, Chief Investment Officer at Sygnum Bank, said: "In such a market environment, Bitcoin always faces challenges as a store of value. But it's important to remember that Bitcoin is not a short-term store of value, nor is it a hedge against short-term market turmoil."
On Thursday, investors withdrew $434 million from U.S. Bitcoin exchange-traded funds (ETFs), keeping market observers cautious.
Adam McCarthy, Research Analyst at Kaiko, said: "I don't see any major catalysts at the moment; this is just a reflection of the current market state. Market activity has significantly decreased, so even a small amount of bargain hunting can drive a price rebound. But I would be very surprised if this trend continues—overall sentiment has not improved, and headwinds far outweigh tailwinds."
