"Bitcoin rebound a 'short-covering rally' without demand…spot trading plunges"

Bitcoin (BTC) has posted a short-term rebound, but analysts say the move has been driven largely by short covering rather than underlying demand.

According to Cointelegraph on the 23rd (local time), Bitcoin recently rose above $71,700, while spot trading volume fell sharply. In particular, Binance’s March spot volume is estimated at about $52 billion, set to mark the lowest level since September 2023—participation comparable to past bear-market phases.

Exchange flow data also point to a slowdown. Over the past seven days, inflows and outflows on Binance totaled about $6.38 billion, dropping to the lowest level since 2024. By contrast, flows on Coinbase have remained relatively steady, suggesting continued participation centered on long-term investors.

This trend is seen as reflecting not only weaker demand but also a decline in selling pressure itself. Still, the pace of exchange inflows by large investors (whales) has surged, meaning the risk of heightened short-term volatility remains.

Derivatives-market factors played a major role in the rise. During the rebound, open interest fell by about 9,700 BTC, down 4%, indicating that position liquidations—rather than fresh buying—helped push prices higher.

On Binance, roughly $44 million in short positions were liquidated within an hour, adding fuel to the advance. Over the same period, the Coinbase premium stayed in negative territory, underscoring that US spot demand was not strong.

The market views the rebound as a short-term move triggered by external headlines and liquidations. Reports that the US had delayed a military response against Iran had an impact, but as the veracity of the information later became uncertain, questions have also emerged over the durability of the rally.

Overall, with falling volume, shrinking open interest and a muted spot premium, the move is widely seen as a technical rebound driven more by position unwinds than by new capital inflows.