Analysts Warn Bitcoin’s 12% Rally May Be a ‘Dead Cat Bounce’
Bitcoin climbed about 12% from $62,822 to $70,846 between Monday and Wednesday, prompting debate over whether the move is a sustainable recovery or a technical ’dead cat bounce.’ Analysts point to technical signs of short covering and a short squeeze rather than fresh institutional demand. Key indicators: a negative Coinbase Premium (suggesting weak institutional buying), declining open interest (position unwinding), and trading volume patterns consistent with covering activity. Tiger Research analyst Ryan Yoon and Bitrue head of research Andri Pauzan Azima described the rally as primarily technical, driven by long liquidations and short covering. Broader risks include ongoing macroeconomic uncertainty, mixed institutional adoption metrics, and elevated correlations with traditional risk assets. Historical precedent (e.g., 2018 bear-market bounces) and market-structure signals—such as lack of sustained volume, unclear on-chain improvements, and negative premium—support cautious sentiment. Traders should watch for confirmation of genuine demand via sustained volume increases, positive Coinbase Premium, rising open interest, improving funding rates, and stronger on-chain activity. Until such signals appear, the move is more likely a short-term technical bounce than the start of a durable bull run.
Bearish
The article emphasizes technical drivers—short covering, long liquidations, negative Coinbase Premium and falling open interest—rather than renewed fundamental demand. Historically, similar rebounds (e.g., during the 2018 crypto bear market) have often preceded further declines when not accompanied by sustained volume, on-chain improvements, or institutional inflows. Short-term impact: elevated volatility with potential for further downside if buying dries up after covering completes. Traders should expect whipsaw price action and watch derivatives metrics (open interest, funding rates), Coinbase Premium, and volume for confirmation. Long-term impact: neutral-to-bearish until clear signs of accumulation and institutional participation emerge; structural recovery requires sustained on-chain activity and positive institutional indicators. Therefore, the likely market reaction is cautious selling or profit-taking rather than aggressive accumulation.