Positioning Unwinds Fuel Rally, Several Encouraging Signs Point to Further Upside
Feb 25, 2026
• 2
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Discussed in today’s video:
- Strong upside session. BTC rallied to just below $70,000, briefly tagging that level after the close. ETH/BTC and SOL/BTC each gained roughly 5%, with broad alt outperformance.
- Initial impulse driven by short covering and liquidations. The rally began around 8 p.m. ET on Tuesday alongside a sharp decline in Bitcoin open interest, with the price moving quickly from approximately $64,000 to $66,000. Funding rates were decisively negative heading into the move, indicating traders were leaning short and effectively fighting the tape.
- Cross-asset confirmation from growth equities. Growth meaningfully outperformed value, and heavily beaten-down software equities saw notable strength. The broader risk tone was supportive, suggesting crypto’s move was not occurring in isolation but rather within a wider improvement in sentiment toward growth-sensitive assets.
- Clear evidence of a positioning reset within crypto. An analysis of the top 120 tokens by market cap, excluding stablecoins, gold-linked tokens, and assets below $100 million FDV, shows a strong negative correlation between year-to-date performance (through 2/24) and today’s return. Year-to-date laggards led the rally, while prior outperformers underperformed. This dynamic is consistent with a squeeze and unwind of crowded short positions.
- Bitcoin strength and spot demand are constructive signals. Unlike prior squeeze-driven sessions, Bitcoin demonstrated clear leadership. We also observed a meaningful Coinbase premium, IBIT traded more than $3 billion in volume, above the recent trend, and early ETF data already reflects over $120 million in net inflows, with most funds yet to report.
- Bottom line: Tactical bias remains constructive. While a meaningful portion of the rally was mechanically driven, the combination of Bitcoin leadership, ETF participation, Coinbase premium, and cross-asset confirmation improves the quality of the move. Follow-through over the coming sessions will be critical, but near-term risk-reward remains favorable for bulls.
