Bitcoin has reached a two-week high, surpassing the $94,000 mark as traders attempt to rebound from a significant selloff that has wiped out over $1 trillion from the cryptocurrency market since early October. At the time of reporting, Bitcoin was trading around $93,700, maintaining a 2.6% gain, marking its strongest intraday performance since November 17.
In the wake of Bitcoin”s ascent, Ethereum has experienced a notable surge of nearly 10%, reaching $3,092, while XRP and SOL also posted gains of 8% and 11.7%, respectively, according to data from CoinGecko. The downturn in the crypto market began shortly after Bitcoin achieved an all-time high of $126,000, leading to widespread declines across various cryptocurrencies and a significant erosion of market confidence.
Market sentiment remains tepid, with no substantial buying strength evident. Data from CryptoQuant indicates that Bitcoin”s buy-to-sell ratio has hit 1.17, the highest level recorded since the current cycle commenced in January 2023. While this figure suggests there are more buyers than sellers, it does not indicate a robust market recovery.
The volatility returned on Monday after comments from Phong Le, CEO of Strategy, indicated that the company could liquidate its Bitcoin holdings to meet debt obligations. This announcement triggered another wave of price declines. In an effort to reassure the market, Strategy later clarified that it had allocated a reserve of $1.4 billion to manage liquidity demands.
Traders like Sean McNulty, who oversees APAC derivatives trading at FalconX, have noted a significant shift in sentiment, stating, “We don”t see a ton of buyers on the top side.” The lackluster inflow of capital into exchange-traded funds (ETFs) further underscores this sentiment, as a collection of 12 US-listed Bitcoin-focused ETFs only managed to attract $59 million on Tuesday, a figure McNulty deemed “feeble.”
On a more positive note, signs of recovery emerged on Tuesday as traders reacted to two key announcements. First, Paul Atkins, the chairman of the Securities and Exchange Commission (SEC), revealed that new regulatory frameworks, including an “innovation exemption” for digital-asset firms, would be unveiled soon. This news provided a glimmer of hope for companies facing regulatory scrutiny.
Additionally, Vanguard Group announced its support for trading ETFs and mutual funds that heavily invest in cryptocurrencies. This development hinted at a potential shift in institutional strategies, which contributed to a notable $400 million in short liquidations across various tokens within a 24-hour period.
Despite the recent price movements, analysts believe the current rebound is merely a temporary relief rally. Melvin Deng, CEO of QCP Group, remarked that while Bitcoin might regain some momentum, the overall market sentiment remains cautious, with traders adopting a wait-and-see approach. As Bitcoin hovers around the $95,000 mark, the expectation for next week”s Federal Reserve meeting looms large, with traders anticipating a 90% likelihood of a 25 basis point rate cut.
Compounding the uncertainty, stablecoin concerns have emerged as S&P Global Ratings downgraded USDT”s stability score to the lowest level. This move raised alarms about potential vulnerabilities, particularly if Bitcoin”s value were to decline again, jeopardizing the stability of the broader crypto ecosystem.
