Crypto market rebounds but faces uncertain growth
|Market picture
The cryptocurrency market has added 3.3% in the last 24 hours. The violent recovery from Monday’s kick-off crash has been losing traction for the past few hours. It seems that while the market has not gone into all-out sell-off mode, a reason for sustained buying is hard to find as threats of surprise tariffs persist.
The sentiment index jumped to 72 after diving to 44. This is a quick return to the norm of recent weeks after a sharp fall on Monday.
Bitcoin went from $98K to $91K on Monday, then reversed to $102K (Saturday’s level), where again, the sellers took the lead. The departure above the 50-day moving average was an important psychological victory for the bulls, but the fight for it continues.
Ethereum is trading near $2700, having fallen under its 200-day moving average and entering the consolidation area from August to October last year. We often view Ethereum as the ‘canary’ of the crypto market, and it’s not feeling great.
News background
According to CoinGlass, the massive price drop resulted in the largest liquidation in the history of the crypto market - about $2.27bn. ByBit estimates the figure to be significantly higher - at least $8bn. On that exchange alone, daily liquidations reached $2.1bn.
According to CoinShares, global investments in crypto funds last week totalled $527 million. Investments in Bitcoin increased by $486 million, in XRP - by $15 million, in Solana - by $5 million, in Ethereum – it decreased by $0.3 million.
XRP is now the second-best performing altcoin, having received YTD inflows of $105 million.
MicroStrategy paused Bitcoin purchases last week, breaking a streak of 12 weeks of continuous buying. The company holds 471,107 BTC on its balance sheet, purchased at an average price of $64,511 per coin.
On 3 February, the ‘kimchi premium’ on Bitcoin - a measure of overpricing on South Korean cryptocurrency exchanges - hit a three-year high above 11.9%. Normally, the figure does not exceed 5%.
According to Reuters, India is reconsidering its attitude towards digital assets amid a transformation in how they are perceived in other countries.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.