Bitcoin traders are beginning to regain confidence in the market's upside potential after a recent sharp sell-off, as indicated by prediction market data. However, this recovering sentiment is juxtaposed with persistent caution reflected in spot price action and derivatives positioning, suggesting the market is in a delicate stabilization phase rather than a full return to risk-on behavior.
Shifting Sands in Prediction Markets
Following a period of heightened volatility, a notable shift in sentiment is emerging within prediction markets. On platforms like Polymarket, the probability of Bitcoin reaching $75,000 in February has risen to 61%, an 8 percentage point increase from its recent lows. This indicates that while not unanimous, a significant portion of traders are reassessing upside risks and are more optimistic about short-term gains after Bitcoin briefly dipped into the high-$60,000 range before stabilizing near $70,000.
Cautious Spot Trends and Defensive Derivatives
Despite this renewed optimism in forward-looking sentiment, the underlying market mechanics present a more reserved outlook. Bitcoin's spot price has modestly rebounded to the $70,000–$71,000 range, but its broader technical structure remains fragile, trading below key moving averages with volume patterns suggesting liquidation-led rebounds rather than robust accumulation. Adding another layer of caution, derivatives data reveals a sustained defensive posture. The Bitcoin long/short ratio remains tilted towards the short side, indicating a lack of aggressive long positioning and a general reluctance among traders to reintroduce leverage, preferring to await clearer confirmation of a sustained uptrend. This disparity highlights a market absorbing a volatility shock, with sentiment recovering faster than concrete conviction across leveraged positions. While expectations for February upside are improving, the hesitant spot and derivatives movements suggest Bitcoin is currently navigating a stabilization phase, patiently awaiting stronger signals for a definitive bullish turn.
