The crypto market has made an impressive recovery from Monday’s crash, despite the heavy forced liquidation of leveraged traders. Leading the charge, Bitcoin (BTC) and Ethereum (ETH) saw a big boost in trading volume over the past 24 hours. Bitcoin’s daily average traded volume surged over 90%, hitting around $93 billion.
As a result, the total crypto market cap jumped by more than 4% to about $2 trillion during the early European session on Tuesday.
Top Reasons for the Crypto Market Surge
- General Rebound in Asian Stocks After experiencing its worst single-day performance in decades, the Asian stock market rebounded on Tuesday, led by the Nikkei 225 and the Asia Dow. A similar bullish trend is expected in the European and US stock markets, which saw significant losses on Monday. This general stock market rebound has positively influenced the crypto market.
- Buyers Seizing the Opportunity Following the heavy liquidations in the past 48 hours, many investors showed fear of further drops. Both Bitcoin and Ethereum’s fear and greed indexes indicated extreme fear of more downturns. However, long-term investors saw this dip as a buying opportunity. For example, the US spot Ether ETF saw a net cash inflow of about $49 million.
- Global Liquidity Boost The crypto market has benefited from rising global liquidity, driven by China, Japan, and the United States. Last Wednesday, the Bank of Japan (BoJ) increased its benchmark interest rate by 25 basis points, its highest since 2008. Meanwhile, the US national debt has surpassed $35 trillion for the first time ever. Starting tomorrow, the US Fed will begin its $30 billion monthly treasury buybacks, injecting more liquidity into the market.
Is the Crash Over?
From a technical standpoint, the worst seems to be over for the crypto market following yesterday’s sell-off. While August and September are typically bearish for the crypto industry, another crash like yesterday’s is unlikely, pointing to a potential rebound in the fourth quarter.
Solana’s Rapid Recovery
Solana (SOL) experienced a significant drop during the market crash, losing 30% of its value in just eight days. It fell from $190 to a low of $110 before quickly recovering to close at $129. The lower price rejection pushing the closing price higher indicates an underlying surge in demand. As the Asian markets recover, the crypto market follows suit, with Solana gaining 8.63% today to trade at $141, suggesting a new bull cycle.
Short-term Reversal Begins Bullish Butterfly Effect
By technical perspective, a double bottom reversal leading to the ongoing recovery. The $142 target has been reached, with the price approaching the $150 mark. The daily RSI line shows an upward tick from the oversold boundary, and Solana’s rise above the 200-day EMA signals a potential bounce back.
Will Solana Hit $200?
With the recent correction phase over, Solana’s quick bounce back hints at another upward trend. The bullish momentum could challenge the $190 resistance and possibly reclaim the $250 mark with a breakout rally.
Bitcoin Price Gains Amid “Extreme Fear”
Bitcoin has gained 4.82% over the past day, reaching $55,848.13. The Crypto Fear and Greed Index has entered the “Extreme Fear” zone for the first time in two years, coinciding with outflows of $168.4 million from US spot Bitcoin ETFs. The broad-based CoinDesk 20 Index jumped 7.26%, recording over $95 million in trading volumes.
Japan’s Topix rose about 10% as the yen weakened against the US dollar, while futures tracking the S&P 500 and Nasdaq 100 also saw gains. Renewed hopes for faster Fed rate cuts have restored risk sentiment, but market watchers remain cautious about a continued rally among major tokens.
