Bitcoin extended its recovery during Wednesday’s U.S. session, climbing back above $68,500 and posting gains of more than 6% over the past 24 hours as an overhang of bearish positioning across the crypto market began to unwind.

The move ignited a powerful rally in altcoins. Ether (ETH) jumped 10%, retaking the $2,000 threshold for the first time in a week. Solana (SOL), dogecoin (DOGE), cardano (ADA) and chainlink (LINK) each rose by double digits, outperforming bitcoin and the broader CoinDesk 20 Index.

With Wednesday’s surge, BTC has now fully reversed the sharp selloff earlier in the week that briefly pushed prices below $63,000. The rebound follows a prolonged period of negative sentiment. The Crypto Fear & Greed Index spent much of February lodged in “Extreme Fear,” highlighting the depth of pessimism that had built up in the market.

Derivatives data underscored how crowded bearish trades had become. Perpetual futures funding rates — the regular payments exchanged between long and short traders — turned negative multiple times in recent weeks, meaning short sellers were paying longs to maintain positions. Such imbalances often set the stage for short squeezes when prices start climbing.

Over the past 24 hours, nearly $400 million in leveraged short positions have been liquidated across crypto derivatives markets, according to CoinGlass. Still, bitcoin’s perpetual funding rates remain slightly below neutral, suggesting the rebound is not being fueled by aggressive leveraged long bets.

Crypto equities rally

The positive momentum carried over into crypto-related stocks. Stablecoin issuer Circle (CRCL) soared 29% after reporting earnings that exceeded expectations. Coinbase (COIN) rose 13%, while bitcoin treasury company Strategy (MSTR) and digital asset investment firm Galaxy (GLXY) gained between 7% and 8%.

Bitcoin miners, increasingly linked to artificial intelligence infrastructure themes, trailed the broader crypto equity rally. Bitfarms (BITF) and MARA Holdings (MARA) advanced about 6%–7%.

Markus Thielen of 10x Research noted that many crypto-linked stocks had accumulated significant short interest from hedge funds in recent weeks, leaving them positioned for a sharp reversal once sentiment turned.

Broader market support

Improving risk appetite in traditional markets added further support. The S&P 500 climbed 0.7% during early trading, while the Nasdaq 100 gained 1.2%. The technology software segment extended its rebound, with the iShares Expanded Tech-Software Sector ETF (IGV) rising another 2%.

Signs are also emerging that U.S. buyers may be returning to the crypto market. The Coinbase Premium Index — which measures the price difference between bitcoin on Coinbase and global exchanges — has flipped positive for the first time in more than 40 days, a signal often interpreted as renewed U.S. institutional demand.

Meanwhile, the year-to-date performance ratio between Strategy (MSTR) and BlackRock’s spot bitcoin ETF (IBIT) is up 12%, reflecting continued appetite for higher-beta exposure even as bitcoin remains down roughly 25% this year.

Adding to the constructive backdrop, U.S. spot bitcoin ETFs logged $257.7 million in net inflows on Tuesday — the largest daily haul since Feb. 6.