Bitcoin has rebounded, climbing back above $US90,000 after a significant sell-off that surprised Wall Street and eliminated approximately $US1.5 billion in leveraged positions. This recovery offers a temporary break in a prolonged downturn, yet traders are approaching the market with caution due to lingering fragile sentiment and continued signs of stress within the broader cryptocurrency markets.
The cryptocurrency experienced a rally, increasing by as much as 5.6 per cent to reach $US91,269. Ether, Bitcoin’s closest competitor, also saw a substantial recovery, rising by over 8 per cent and pushing its price back above the $US3000 mark. Smaller cryptocurrencies such as Cardano and Chainlink also saw jumps of more than 10 per cent. Despite this recovery, several indicators suggest that the rebound may be unsteady, according to market analysts.
According to CryptoQuant, the Bitcoin funding rate, a key indicator of market sentiment, has recently turned negative. This suggests that there is greater demand for bearish positions in the perpetual futures market compared to bullish ones. Chris Kim, chief executive of quantitative asset management protocol Axis, noted that overall sentiment remains cautious, with crypto-native traders exhibiting nervousness.
Institutional investors appear to be awaiting the Federal Reserve’s upcoming interest rate decision before increasing their risk exposure, Kim added. Bitcoin has fallen nearly 30 per cent from its peak in early October, leaving the digital asset market in a vulnerable position following weeks of selling pressure. The decline intensified when around $US19 billion in leveraged bets were liquidated.
