Bitcoin's Sharp Selloff Below $70K and Quick Rebound Signals Heightened Volatility

Bitcoin took traders on a rollercoaster this week, plunging below $70,000 and wiping out massive chunks of market value before staging a stunning recovery. The crypto king triggered extreme fear levels not seen in years, only to reclaim key support in a matter of hours. This wild swing underscores the market's fragile state amid broader economic pressures.

The selloff hit hard and fast. Bitcoin slid under $71,000, pushing the fear and greed index to rock-bottom readings around 11 out of 100, with some charts showing it dipping even to 5—the lowest since the brutal 2022 bear market. Over the past week, the broader crypto market shed nearly $500 billion in capitalization, fueling panic across trading floors and social feeds. Liquidations piled up to over $700 million as leveraged positions got wrecked, amplifying the downside momentum. Traders on X lit up with warnings of deeper corrections, pointing to macroeconomic headwinds like sticky inflation data and regulatory whispers. Yet, the rebound was equally ferocious. In just 24 hours, Bitcoin clawed back above $70,000, erasing much of the prior week's damage. What explains this snapback? Sentiment shifted as dip-buyers piled in, convinced the core bull thesis—spot ETF inflows, halving aftermath, and institutional adoption—remains intact. Discussions highlighted how markets rarely linger in fear when fundamentals hold steady. This isn't the first volatility spike post-halving; history shows these fear-driven dips often precede stronger legs up.

The carnage erased up to $1 trillion across crypto at the lows, with altcoins suffering even steeper drops. Bitcoin dominance ticked higher during the rout, as capital fled riskier assets. Liquidations hit longs hardest, shaking out weak hands and resetting leverage. Post-rebound, total market cap stabilized around previous levels, but volatility metrics like the BVOL index surged, signaling choppier waters ahead. Major exchanges saw volume explode, with BTC spot trading topping $50 billion daily. ETF flows turned net positive again, absorbing supply and propping up prices. For retail and institutions alike, this episode serves as a reminder: in crypto, fear is fleeting, but volatility is the new normal.

Bitcoin's selloff and rebound capture the essence of crypto's maturing yet unpredictable nature. Extreme fear gave way to calculated opportunism, proving resilient demand beneath the noise. As traders eye the next moves, watch for sustained $70,000 holds and macro cues—the bull market thesis endures, but expect more turbulence on the path to new highs. Sources: @pawnie_, @liambryceapple, @mandalaangel