Markets are going wild! Japanese stocks surged more than 11% after falling 12% on Monday. The Nikkei 225 rebounded sharply, reflecting the turbulent state of global markets.

Japanese stocks rebound

The Nikkei 225 stock index rose 10.23%, or 3,217 points, its biggest one-day gain, a day after a sharp 12% drop as the Bank of Japan's second rate hike in 17 years strengthened the yen against the dollar, making Japanese stocks and exports more expensive for foreign investors.

Affected by concerns about the slowdown in the US economy, US, British and European stock markets all fell on Monday. Globalization has not only affected the stock market, but also crypto assets, and signs of market instability have become prominent.

Bitcoin’s Recovery

Bitcoin has managed to reclaim the $56,000 mark amid turmoil. The leading cryptocurrency surged to an intraday high of $56,277 early Thursday, according to Bitstamp data. The recovery mirrors a rebound in global stock markets, especially Japan's Nikkei 225 index. U.S. futures markets have recovered, giving investors hope.

After falling to a low of $49,557, Bitcoin has surged more than 13%, recovering most of its losses. The Crypto Fear & Greed Index entered the "Extreme Fear" zone for the first time in two years, and the U.S. spot Bitcoin exchange-traded fund lost $168.4 million. In addition, the Bitcoin and Cryptocurrency Market Sentiment Index slipped to 17 out of 100 on August 5, the lowest level since July 12.

Investor Sentiment and ETF Inflows

According to on-chain data, long-term investors see the cryptocurrency crash as an opportunity to buy on the dip. For example, the U.S. spot Ethereum ETF has seen net cash inflows of about $49 million.

“Both our Bitcoin and Ethereum ETFs had net inflows today. ETF investors are buying the dip,” Bitwise CIO Matt Hougan said in the X post, nodding to the market’s rapid recovery.

Still, Sean McNulty of Arbelos Markets noted that overall sentiment remains cautious.

The Fed's next move

Macroeconomic uncertainty persists, with much speculation about the Fed’s next move. While a 25bp rate cut in September is almost certain, Fed watchers are debating the possibility of a 50bp cut. Upcoming labor market data could influence the Fed’s decision, with potential implications for both traditional and cryptocurrency markets.