Financial markets rebounded across the board on Tuesday as investors took advantage of the pullback to buy the dip, with U.S. stocks and cryptocurrencies recovering somewhat, although prices remained well below pre-sell-off levels.
As of the close of the day, the S&P, Dow Jones and Nasdaq all rose by 1.04%, 0.76% and 1.03% respectively. Gold fell by 0.63% due to weakening safe-haven demand.
According to BitPush data, Bitcoin (BTC) climbed from the $54,000 support level to a high of $57,100 on Tuesday, regaining support at the lower end of the trading range since the end of February. As of press time, Bitcoin is trading at $56,051, up 2.25% in 24 hours.
Altcoins saw a double-digit recovery, with all of the top 200 tokens by market cap posting gains, excluding stablecoins.
Meme token cat in a dogs world (MEW) rebounded the most, rising 39.8% to trade at $0.00568, Notcoin (NOT) rose 30%, and AIOZ Network (AIOZ) rose 27.9%.
The current overall cryptocurrency market capitalization is $2 trillion, with Bitcoin accounting for 55.9%.
Whales holding 1,000 to 10,000 BTC buy on dips
Data from blockchain analytics firm IntoTheBlock shows that Bitcoin whales, or large asset holders, seize price drops to add to their holdings, while small investors sell when panic ensues.
IntoTheBlock analysts said crypto wallets holding between 1,000 and 10,000 BTC, worth roughly $56 million to $560 million at current prices, “have shown confidence during the recent decline, consistently adding to their holdings as prices fall.”
Meanwhile, wallets holding less than 1 BTC “performed more weakly, with holdings falling significantly during yesterday’s market downturn.”
Data collected by Farside Investors showed that U.S. spot bitcoin ETFs saw net outflows of $168 million on Monday, with outflows concentrated in Grayscale's GBTC, Fidelity's FBTC and 21Shares/Ark Invest's ARKB, while competitors saw very modest or lackluster inflows.
Bloomberg senior ETF analyst Eric Balchunas noted that outflows accounted for only 0.3% of total ETF assets under management. In addition, he said the largest BTC spot ETF – BlackRock’s $18 billion IBIT – had no net outflows.
Need to regain support of $59,000
“A lot has changed in the past two weeks,” said market analyst Bloodgood on the X platform. “If we were discussing whether BTC would break $69,000, now we are looking at whether the $51,000 level can be maintained. Bitcoin has fallen 30% in the past two weeks due to market turmoil.”
He added: "However, we are not interested in fundamentals in this section; we are looking at the charts, a bottom was formed just below $50,000 and a rebound is underway. If we want to see a continuation of the rally soon, we need BTC's weekly chart to close above the key weekly level of $59,000. Otherwise, we may see sub-$50,000 levels soon."
“As Bitcoin has failed to make a higher high on the weekly chart, we now have three lower highs and three lower lows, indicating that we are still in a downtrend,” Bloodgood said. “Unless this changes, I would not be comfortable looking for longs and would continue to wait until the trend turns.”
Regarding Ethereum’s trend, Bloodgood believes: “Similar to BTC, ETH needs to reclaim $2,600, which is a key level to push ETH towards $4,000. If this does not happen, we may see it test $2,000. On the other hand, breaking through this level will allow ETH to reach $2,800 and then $3,300.”
According to a CryptoQuant market report on Tuesday, BTC’s market value to realized value (MVRV) ratio has fallen below its 365-day moving average, a situation that historically signals a continuation of price declines. The report notes that the same key support level was breached during the COVID-19 crash in March 2020, the May 2021 downturn, and at the start of the bear market in November 2021.
“Investors should monitor these valuation metrics to assess the likelihood of a price rebound or further correction,” the analysts added.
Ki Young Ju, founder and CEO of CryptoQuant, analyzed on the X platform: "As long as Bitcoin can stay above $45,000, it may break through its all-time high again within a year. Although some indicators now show bearish signals. But in fact, there is still a possibility of a rebound, so we need to observe whether it will stay at this level for a week or two. If it lasts longer, the risk of a bear market will increase, and if it lasts more than a month, recovery may be difficult."
