Bitcoin Rebounds Following Sharp Market Correction
Bitcoin is on the mend after one of its most significant corrections this year. On-chain data suggests this crypto crash might have set the stage for a healthier recovery.
During Friday’s market-wide downturn, Bitcoin’s open interest dropped by $12 billion, falling from $47 billion to $35 billion. This sharp decline marked one of the steepest leverage resets in recent history. The price of BTC dipped as low as $102,000, well below its recent peak above $126,000. Though, buyers stepped in over the weekend, pushing BTC back up to around $115,117.
key on-chain metrics show signs of stabilizing sentiment and rising liquidity. Funding rates, which turned negative during the sell-off, have now stabilized at modestly positive levels. This indicates that extreme bearish bets are unwinding, and sentiment is normalizing.
The bitcoin Estimated Leverage Ratio (ELR) also fell sharply, reaching its lowest point since August. This suggests that excessive leverage has been flushed out, reducing the risk of further liquidations.
Meanwhile, the stablecoin Supply Ratio (SSR) has declined to its lowest level since April. A lower SSR means more stablecoin liquidity is available, perhaps ready to flow into Bitcoin once confidence returns.
Historically, large-scale deleveraging events like this have frequently enough preceded major price recoveries. This recent reset could be a positive signal for the months ahead.
Digital asset investment products saw US$3.17 billion in inflows last week, with BTC leading at US$2.67 billion. this demonstrates continued investor confidence, even amid market volatility.
Trading activity also hit record levels. Weekly volumes on digital asset ETPs reached US$53 billion, double the 2025 weekly average. This strong inflow and elevated trading volume indicate that market participants remain confident in Bitcoin and the broader market.
Combined with high liquidity, this may support the current rebound and set the stage for a more sustained recovery in the weeks ahead.
