Bitcoin returns to the 70,000 USD mark, market sentiment shifts to optimistic

After weeks of trading in a cautious state, Bitcoin unexpectedly surged back and surpassed the 70,000 USD mark, leading to a noticeable change in cryptocurrency market sentiment. According to data from the market analysis platform Santiment, positive discussions about Bitcoin on social media are rapidly increasing, indicating that investors are starting to return with an enthusiastic mindset.

This change occurred after U.S. President Donald Trump made comments suggesting that the conflict with Iran may be nearing an end. The signals of geopolitical de-escalation have contributed to positive sentiment in risk asset markets, including cryptocurrencies.

According to Santiment, positive discussions about Bitcoin on platforms like X, Reddit, Telegram, and many other crypto communities have been steadily increasing after a sharp decline earlier in the week. The rapid recovery of Bitcoin back to the $70,000 range further reinforces the belief that the market may be entering a new recovery phase.

Middle Eastern tensions and oil prices affect crypto cash flow

Last month, tensions in the Middle East escalated after the U.S. and Israel conducted attacks aimed at Iran. In response, Iran carried out retaliatory actions in some areas of the region, causing global financial markets to fall into instability.

However, in a recent statement, Donald Trump indicated that the conflict may soon reach a conclusion. Although he later warned that the U.S. could increase military pressure if Iran disrupts oil supply, the mere possibility of de-escalation is enough to improve market sentiment.

Santiment suggests that periods of geopolitical instability often lead investors to seek alternative assets. In this context, the cryptocurrency market tends to react very quickly due to 24/7 activity and is not reliant on any national financial system.

Bitcoin demonstrates resilience against macro shocks

Ryan McMillin, the investment director of crypto asset management firm Merkle Tree Capital, noted that in addition to geopolitical factors, many other drivers are supporting Bitcoin's recovery.

According to him, Bitcoin has shown significant resilience against recent macro shocks. Additionally, the increasingly strong participation of large institutions also helps to bolster investor confidence.

A notable example is the company Strategy (formerly MicroStrategy) which purchased nearly 18,000 Bitcoin just last week and continues to execute another buying round this week.

Additionally, other macro factors such as inflation gradually cooling, the temporary reduction in the risk of a sharp rise in oil prices, and the potential change in the Chair of the Federal Reserve in the near future are also seen as supportive factors for the market.

McMillin believes that if cash flow continues to return, short positions may be forced to liquidate, creating a 'short squeeze' that drives Bitcoin's price closer to the $80,000 mark before the market establishes the next trend.

Surpassing the $70,000 mark triggers FOMO sentiment

Rachael Lucas, a cryptocurrency analyst at BTC Markets, believes that Bitcoin reclaiming the $70,000 mark is significant in terms of sentiment.

According to Lucas, this is an important resistance zone. When the price surpasses this threshold and appears consistently on price boards, trading notifications, and social media, it often triggers the fear of missing out, also known as FOMO, within the investor community.

In addition to price factors, a series of other positive signals are also supporting market sentiment. The potential for de-escalation in the Iran conflict, declining oil prices, and progress in establishing a regulatory framework for stablecoins in the U.S. all contribute to improving the outlook for the crypto ecosystem.

Lucas believes that when many positive factors appear simultaneously, the market's reaction typically occurs very quickly. This explains why FOMO sentiment can spread rapidly in a short time.

Despite a strong increase in FOMO, the market remains cautious

Although positive discussions about Bitcoin are increasing, many overall sentiment indicators still show a certain level of investor caution.

The Crypto Fear & Greed Index currently remains at 15 points, corresponding to an 'extreme fear' state. This index is calculated based on various factors such as Bitcoin price volatility, trading volume, social media data, Google search trends, and Bitcoin's market dominance.

Meanwhile, Google Trends data indicates that the search volume for the keyword 'Bitcoin' remains lower than during the peak in early March.

However, according to McMillin, in the crypto market, FOMO often has a self-reinforcing nature. When sentiment shifts from fear to greed, new money can pour in quickly, increasing liquidity and driving prices up in the short term.

On-chain data shows that market fundamentals are improving

In addition to psychological factors, on-chain data also shows that some positive signals are forming.

According to Lucas, the funding rate in the derivatives market has been adjusted to a more balanced level after a period of high volatility. Meanwhile, cash flow from Bitcoin spot ETFs remains stable, indicating large institutions are still interested in the market.

Notably, this FOMO cycle may be different from previous phases. In the past, many price surges of Bitcoin were primarily driven by leverage from retail investors. In contrast, the current cycle has stronger participation from institutional cash flow, creating a more stable foundation for the market. However, experts still warn that the crypto market can change very quickly. Geopolitical risks have not completely disappeared, and any new tensions related to oil supply or regional conflicts could cause market sentiment to shift from FOMO to FUD in a short time.