Written by: Mia, ChainCatcher

Editor: Marco, ChainCatcher

After Bloody Monday, global markets got a chance to breathe today.

Asian stocks opened strongly on Tuesday, led by gains in the Nikkei and the Topix. Japan's benchmark Nikkei 225 rose more than 8%, recovering some of its losses after a 12% drop on Monday; Australian stocks were largely flat; U.S. stock futures also rose, with Nasdaq 100 futures extending gains to 2%.

At the same time, the cryptocurrency market also showed signs of rebound. In the past 24 hours, the total value of the global crypto market has rebounded above US$2 trillion, and the BTC price has returned to US$55,000.

While investors remain concerned about a slowing U.S. economy and geopolitical risks, they are actively looking for bargain hunting opportunities.

Federal Reserve officials rushed to put out fire

Global markets experienced a hellish plunge on Monday, and investors fell into panic. Chicago Fed President Goolsbee and San Francisco Fed President Mary Daly stepped in to "put out the fire" and tried to calm investors.

Goolsby stressed that the July non-farm payrolls report only represents "a piece of data", and although this employment data was weaker than expected, it does not mean that the economy has fallen into recession. Daly also pointed out that the US job market is still strong and they will wait and see more data to decide whether to take action. At the same time, she revealed that the FOMC will be open to cutting interest rates at the next meeting.

Currently, traders in the market generally believe that the Fed will cut interest rates by 50 basis points at its next policy meeting in September with a 74% chance and a 27% chance of a 25 basis point cut. According to the CME's FedWatch tool, the expectation of a 50 basis point cut was fully digested by the market earlier on Monday, and in the panic at that time, a 75 basis point cut was also considered possible.

Analysts have given different explanations for this wave of market rebound.

Some analysts believe that this is because investors have gradually calmed down from the panic of the impending recession in the US economy and adjusted their investment strategies in the Asian market. On Monday, the July ISM service PMI index released by the US Institute for Supply Management rebounded to 51.4, in line with market expectations, which further eased market concerns.

On the other hand, the rebound in Japanese stocks on Tuesday may also be related to the gradual calming of the carry trade wave. Chris Weston, head of research at brokerage Pepperstone, predicted before the opening of Japanese stocks that the shocking historical trend in Asian markets on Monday was mainly due to the massive liquidation of margin positions. Therefore, he expects a strong rebound in the market after the opening of Tuesday. However, he also warned that after such a fierce leverage adjustment, major Japanese banks have suffered heavy losses, and now only the bravest may dare to enter the market.

Cryptocurrencies rebound across the board

The total value of the global crypto market rebounded to $2.06 trillion, of which BTC broke through $56,000, and the 24-hour decline narrowed to 0.24%. Old-brand altcoins, led by SOL and BNB, also saw a general rise, with a 24-hour increase of about 8%. At present, BNB has rebounded to $480, with a 24-hour increase of 9.5%; Sol has rebounded to above $140, with a 24-hour increase of nearly 15%.

In this regard, Alex Thorn, head of research at Galaxy, remains confident in the bull market and said that "although the decline this time seems tragic, its magnitude is comparable to the declines during previous bull markets."

Bitwise CEO Matt Hougan also compared this weekend's crash to the March 2020 crash in an article, arguing that yesterday's sell-off was a buying opportunity.

On the other hand, this rebound is also closely related to the whales’ counter-trend trading strategy. Some whales are buying on dips during this round of decline, and their behavior can often predict future trends.

Currently, the amount of Bitcoin withdrawn by whales from exchanges has reached a 9-year high, with whale holders accumulating 84,000 BTC in July alone.

According to @ai_9684xtpa's monitoring, the whale who built a position of 58,400 ETH at an average price of US$2,265 since May 2023 once again bought at a low point. This whale withdrew 6,000 ETH from Binance when the market plummeted nine hours ago, worth US$13.82 million, at a cost of approximately US$2,304.

In addition, the address suspected to belong to Justin Sun also withdrew 14,884 ETH from Binance today, worth approximately US$34.7 million. Currently, Justin Sun holds more than 700,000 ETH.

Currently, ETH has rebounded above $2,400 and briefly touched $2,500, with the 24-hour decline narrowed to 6.77%.

Compared with the old-line altcoins, some altcoins with newer narratives have seen weaker rebounds, and investors are mostly taking a wait-and-see attitude towards them.

According to data, the price of TON fell 17% last month. According to Santiment data, the number of whales holding a large number of TON tokens has increased by 2% in the past month. However, the current TON rebound is weak, with an increase of 3.3% in 24 hours.

Where will the market go in the future?

Despite the market rebound, investors still need to remain cautious.

The current situation may provide a good long-term entry opportunity, but in the short term, the rebound in global markets may still face certain uncertainties.

Markus Thielen, founder of 10x Research, said that if the current economic weakness worsens into a recession, the price of Bitcoin could fall to $42,000.

In addition, despite gains in both Asian stock markets and cryptocurrency markets, market sentiment remains fragile.

Business analyst Jill Schlesinger noted that most stock market indices hit new highs in mid-July, and ever since then, there have been concerns that the stock market bubble could be pricked.

However, in the long run, the direction of the global market will depend more on fundamental factors. American professional investors remain optimistic about the development of BTC and ETH, and the contrarian trading strategies of whales may also indicate a future upward trend.

Some analysts pointed out that the market has not shown any signs of economic recession, the yen interest rate hike has not had a direct impact on the US market, and the impact on cryptocurrencies will be limited. The market is greatly affected by trading sentiment, but US stocks have begun to rebound.

Daniel Cheung, co-founder of Syncracy Capital, is also optimistic: "It is expected that cryptocurrencies will recover relatively quickly, because most of the current sell-offs are forced and are entirely caused by panic. Ironically, the entrance to a larger bull market has been opened."

In addition, analysts also said that the current BTC and ETH in CME maintain positive premiums. Even if the premium is large, it has not caused an impact on the spot price, which may indicate that hedge funds are not very interested or have not engaged in a large amount of hedging. The positive premium of CME shows that professional investors in the United States are still optimistic about the development of BTC and ETH. Although CME is an arbitrage tool, the widening of the spread does not necessarily lead to liquidation. In the long run, the focus of the market is still on investors' expectations for the future.