Crypto markets stage V-shaped rebound

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Introduction

It has been one of the most volatile weeks in recent memory. Bitcoin briefly shed nearly 50% from its October 2025 all-time high, dragging the broader market into extreme fear territory. 

Liquidations piled up, ETF outflows accumulated, and sentiment hit its lowest point in months. Then, almost without warning, the market turned. A brutal short squeeze, renewed institutional inflows, and returning risk appetite across global equities combined to deliver a sharp V-shaped recovery. Whether this marks a genuine turning point or a temporary relief rally remains to be seen. Here is what happened, and what it means for you.

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State of crypto

• Bitcoin stages a V-shaped recovery overnight after falling 50% from its October 2025 ATH
• Over US$500 million in short positions were liquidated in 24 hours
• US spot Bitcoin ETFs reversed five weeks of outflows, recording US$257.7 million in a single day
• Circle reported record earnings with USDC circulation hitting US$75 billion
• Stripe is reportedly in early discussions to acquire PayPal 
• Bitcoin adoption hit record highs in 2025; 29 of the top 30 US investment advisors hold BTC

Bitcoin bounces back after five straight weeks of losses

To understand this week's recovery, you first need to appreciate the scale of the sell-off that preceded it. Bitcoin fell to a low of US$60K, representing a drawdown of 52% from its October 2025 all-time high of US$126,000. In dollar terms, that erased approximately US$1.96 trillion in market capitalisation. The Fear and Greed Index dropped to 5 out of 100, a reading that signals extreme fear and capitulation. Nearly nine million BTC, roughly 45% of the circulating supply, was sitting underwater, meaning holders were carrying unrealised losses.

The catalyst for the reversal was a confluence of events rather than a single trigger. Over US$500 million in short positions were forcibly closed in 24 hours, with US$247 million wiped in a single four-hour window. When short sellers are liquidated at this scale, the resulting forced buybacks push prices higher, which in turn triggers more liquidations. The move snowballed quickly. Bitcoin climbed from its session low of US$63,913 to a high of US$69,988 in hours, with Ethereum jumping 16%, Solana gaining 16%, and XRP advancing 10%. It was a sharp and ferocious reset that caught bearish traders badly offside.

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Institutions return as ETF flows reverse course

For five consecutive weeks, US spot Bitcoin ETFs had been bleeding capital. Institutional investors sold approximately 25,000 BTC worth of ETF shares in that period, with investment advisors reducing exposure by 21,831 BTC and hedge funds trimming by a further 7,694 BTC.

Total assets under management in US Bitcoin funds fell 30.5%, dropping from US$117 billion to US$81.3 billion since early 2026. It was a sustained and confidence-denting stretch of outflows that weighed heavily on spot market sentiment.

Tuesday changed the narrative. US spot Bitcoin ETFs recorded US$257.7 million in net inflows in a single session, the largest daily figure since early February. Fidelity led with US$83 million, followed by BlackRock with US$79 million. This is not speculative money. Spot ETF inflows represent genuine buying of Bitcoin in the open market, and when the largest asset managers in the world put capital to work at these levels, it sends a clear signal to the broader market. 

The question now is whether this marks the beginning of a sustained re-entry or simply opportunistic dip-buying. Either way, it provided meaningful support to price action.

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Circle's record results and the stablecoin surge

Away from price action, Circle delivered one of the more impressive earnings reports the crypto sector has seen in some time. The company posted Q4 2025 revenue of US$770 million, a 77% year-on-year increase that beat analyst estimates of US$744 million. Earnings per share came in at US$0.43, against expectations of US$0.16. USDC circulation grew 72% year-on-year to US$75.3 billion, and on-chain transaction volume surged 247% to US$11.9 trillion. Circle's shares jumped 21% to 30% in response.

The results land in the context of a broader stablecoin story that is accelerating. Standard Chartered now forecasts the stablecoin market cap will grow from US$304 billion to US$2 trillion by 2028, a trajectory driven by macroeconomic adoption rather than crypto-native use cases alone. Stablecoins already transferred US$18.4 trillion in value in 2024, surpassing Visa and Mastercard in raw volume. That growth is expected to generate US$800 billion to US$1 trillion in new US Treasury bill demand, with stablecoin issuers becoming significant and reliable T-bill buyers.

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Stripe eyes PayPal in a deal that reshapes payments

In what could be the most consequential deal in fintech for years, Stripe is reportedly in early-stage discussions to acquire PayPal. Stripe, valued at US$159 billion and processing US$1.9 trillion in annual payment volume, would be combining with a platform that counts more than 400 million consumer accounts globally. While the talks are preliminary, the strategic logic is significant for the crypto sector. Stripe recently received conditional approval for a US national bank trust charter for its stablecoin subsidiary Bridge, while PayPal launched its own stablecoin PYUSD in 2023.

A combined entity would bring together two of the most significant stablecoin and crypto on-ramp infrastructures in the world. Stripe's backend payment rails paired with PayPal's consumer reach could dramatically accelerate mainstream crypto adoption, particularly for stablecoin-denominated payments. PayPal's stock rose 6.74% on the news despite a difficult 12 months that has seen the company shed 20% year-to-date and trade around 85% below its 2021 highs. For the crypto market, this story is less about short-term price impact and more about the continuing convergence of traditional financial infrastructure with digital asset rails. Worth watching as it develops.

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Adoption hits record highs despite the price correction

One of the more striking data points of the week is the disconnect between Bitcoin's price performance and its underlying adoption metrics. Despite trading 50% below its all-time high for most of the week, 2025 was a record year for Bitcoin adoption. Institutions accumulated 829,000 BTC, 29 of the top 30 US investment advisors now hold Bitcoin positions, and five new nations including Luxembourg, Saudi Arabia, and the Czech Republic became Bitcoin holders, bringing the total sovereign holders to 23 countries. US merchants accepting Bitcoin tripled, and global adoption grew 74%.

Public company Bitcoin holdings increased 2.5 times over the year, with 194 firms now holding BTC on their balance sheets. Approximately 60% of the 25 largest US banks are actively building Bitcoin-related products. MicroStrategy, now the most heavily shorted large-cap US stock at 14% of market cap, continues to hold 717,722 BTC acquired for US$54.56 billion. Despite facing around US$7 billion in unrealised losses at current prices, analyst Tom Lee at Fundstrat has flagged that the crowded short position could itself become a catalyst for a significant squeeze. History suggests that periods of deep correction accompanied by record adoption are worth paying attention to.

Crypto Fear & Greed Index

Source: Fear & Greed Index

BTC Markets in the news

Bloomberg: Bitcoin Heads for Worst Month Since Crypto Collapse of June 2022

“President Trump’s decision to raise global tariffs to 15% rattled risk assets broadly, and Bitcoin moved with them,” said Rachael Lucas, crypto analyst at BTC Markets. “Despite the ‘digital gold’ narrative, Bitcoin continues to trade as a risk asset. When macro fear spikes, capital rotates toward traditional safe havens. Bitcoin is not there yet.”

Decrypt: Bitcoin's Slide to $64,000 Is a 'Macro Shock,' Not a Market Breakdown

"Bitcoin's drop below $64,000 was not a single event," Rachael Lucas, crypto analyst at BTC Markets, told Decrypt. "It was the result of several macro shocks landing over time on a market carrying significant leverage built up from its October 2025 all-time high."

The week ahead: Economic events

Friday, February 27th

• France Inflation Rate
• India GDP Annual Growth Rate
• Germany Inflation Rate
• Canada GDP Growth Annualized, GDP Growth Rate
• United States Producer Price Inflation MoM

Monday, March 2nd

• China RatingDog Manufacturing PMI
• Italy Full Year GDP Growth, Government Budget
• United States ISM Manufacturing PMI

Tuesday, March 3rd

• Euro Area Inflation Rate
• Italy Inflation Rate

Wednesday, March 4th

• Australia GDP Growth Rate
• China NBS Manufacturing PMI
• Japan Consumer Confidence
• United States ISM Services PMI

Source: Trading Economics

Market reflections

• United States: Dollar softens as tariff ruling reshapes trade outlook and geopolitical risks rise
• Europe: Regional equities edge higher but remain sensitive to global trade uncertainty
• China: Lending rates held steady as policymakers signal measured support for growth
• Japan: Yen weakens amid political scrutiny over the pace of monetary tightening
• Australia: Central bank explores new inflation metrics as it refines policy assessment tools

Global markets this week were driven by trade developments, policy expectations, and geopolitical risks, reinforcing a cautious backdrop for investors across major economies.

The US dollar weakened after a court decision challenged the legal basis of recent tariff measures, introducing fresh uncertainty around the future direction of trade policy. At the same time, rising tensions in the Middle East encouraged more defensive positioning across currency markets.

Across Europe, equities finished modestly higher, supported by corporate resilience and selective sector strength. However, uncertainty around global trade policy continued to cap momentum, keeping investor sentiment measured.

Policy signals from China remained cautious, with benchmark lending rates held unchanged for a ninth straight month. The decision reinforced expectations that authorities prefer targeted support rather than large-scale stimulus as they balance growth concerns with financial stability risks.

Currency markets in Japan reacted to reports that political leaders questioned the pace of future rate increases, pushing the yen lower. The development highlighted how sensitive markets remain to shifts in communication around policy normalisation.

Meanwhile, in Australia, the central bank’s review of monthly inflation data as a potential new policy gauge signalled an effort to refine how price pressures are monitored. This reinforced expectations that future rate decisions will remain closely tied to incoming data.

Final thoughts

This week delivered both a sharp reality check and a reminder of why crypto markets remain unlike any other asset class. The sell-off was severe, the recovery was quick, and the underlying adoption data tells a story that does not always match the price chart.

Heading into the week ahead, watch ETF flow data closely for signs that institutional re-entry is sustained rather than opportunistic. Keep an eye on macro sentiment, particularly US equities and inflation data, which continue to drive correlated moves in Bitcoin. And monitor the Terraform versus Jane Street lawsuit, which has the potential to move markets quickly.

Ready to take advantage of the opportunities shaping the market? Log in to trade on Australia’s own digital asset exchange and stay positioned for what comes next.

Online safety: How to spot impersonation attempts

Impersonation attempts occur when someone pretends to be a bank, crypto exchange, government agency, or even someone you know. These messages may use familiar names, altered contact details, or convincing language to make the communication appear genuine.

You may receive texts, emails, or calls that look official and claim there is an urgent issue with your account or recent activity. Some may request personal information or direct you to click a link to “verify” details. These tactics aim to create pressure so that you respond before checking the source.

What to watch out for

• Messages containing links that ask for logins or personal information.
• Urgent requests that ask you to act quickly to resolve a supposed issue.
• Calls or texts claiming to be from government agencies that mention legal action or arrest.
• Business payment instructions that suddenly change bank account or BSB details.
• Contacts who say they have a new number but avoid confirming their identity.

How to stay safe

• Avoid clicking links or downloading attachments from unfamiliar sources.
• Confirm the message by reaching out to the organisation using official contact details.
• Pay attention to subtle changes in phone numbers, email addresses, or names.
• End the conversation if the tone becomes threatening or intimidating.
• Verify the identity of anyone claiming to be a friend or family member with a new number.

Australians continue to receive messages claiming they are entitled to refunds, grants, prize winnings, or even inheritances. These offers may look official and often impersonate government agencies, banks, or well-known companies to appear trustworthy.

You may be asked to pay “processing fees” or “taxes” upfront, or to share banking or identity information to release the funds. These tactics are designed to create urgency or excitement, so you act before confirming whether the offer is genuine.

Learn more at scamwatch.gov.au.

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