Santiment Insights: Bitcoin's Recovery Fuelled by Market Fear, $70K Target

Bitcoin (BTC) dipped to about $60,000 earlier today before swinging back towards $65,000, following one of the most significant sell-offs in its trading history.

This shift has divided traders: some view the bounce as a mere technical reaction, while others believe extreme fear is priming the market for a recovery towards $70,000.

Growing Fear Amid Bitcoin’s Bounce

On February 6, Santiment highlighted that social media mentions calling for Bitcoin to plunge “lower” surged after the price fell to $60,000—a trend often observed prior to a short-term price recovery.

Indeed, Bitcoin did rise back to around $65,000 after experiencing a historic decline of over $10,000 for the first time in a single day, alongside reports of a significant leveraged position being liquidated.

“Is this merely a dead cat bounce?” Santiment questioned, suggesting that retail investors may have been sufficiently shaken to allow for a swift rally back towards the $70,000 range.

The sell-off concluded a streak of severe downward pressure, with Bitcoin wiping out gains from Donald Trump’s re-election, causing most major altcoins to decline sharply. XRP dropped by 13% for the day, with Ethereum, Solana, and BNB also suffering notable losses.

On-chain and derivatives data indicate a mixed outlook beneath the surface recovery. DeFi commentator Marvellous reported that while “smart money” has adopted a net short position, larger investors and prominent figures are favoring long positions. The commentator asserted that the current market activity resembles an automatic response following $2.2 billion in long position liquidations rather than renewed investor confidence. Notably, open interest remains high, and funding rates have stabilized.

In the meanwhile, trader Sykodelic pointed out an unbalanced liquidation landscape, observing that the market had liquidated many long positions, leaving approximately $29 billion in short positions compared to about $100 million in long positions over a one-year horizon.

Price Trends Show Significant Damage Despite Temporary Rebound

Bitcoin is currently priced around $65,000, reflecting a nearly 9% drop in the past 24 hours and more than 21% over the last week, with monthly losses nearing 30%, placing it about 48% below its all-time high of over $126,000 achieved in October 2025.

Analysts at CryptoQuant have noted that the current market downturn seems to be occurring at a quicker pace than the bear market of 2022, with Bitcoin experiencing a 23% decrease within 83 days of dropping below its 365-day moving average, compared to a modest 6% drop during the same timeframe in early 2022.

Santiment also mentioned that sentiment surrounding Bitcoin and Ethereum (ETH) has turned extremely negative—such conditions often align with brief relief bounces when retail investors are excessively fearful.

Currently, traders are at a crossroads. Some view the build-up of short positions and fear as a catalyst for a decline towards $70,000, while others caution that without a drop in open interest and sustained sideways movement, the recent uptick may be just a precursor to another downturn.