Bitcoin Jumps Above $56K, Solana Leads Recovery From Monday’s Rout

Bitcoin (BTC) rose above $56,000 early Tuesday, buoyed by a broader market recovery in Asia as opportunity hunters stepped in following Monday’s sharp price drop.

CoinGecko data shows BTC is up 6%, its biggest 24-hour price increase since May, triggering a broader market recovery. Ether (ETH) and XRP (XRP) are up 8%, BNB Chain’s BNB is up 12%, and Solana’s SOL is up as much as 16%.

The broad-based CoinDesk 20 (CD20), the liquid index that remains after stablecoins are removed from the largest tokens by market capitalization, recorded a trading volume of over $95 million, up 7.26%.

Japan’s Topix index rose nearly 10% as the yen weakened against the U.S. dollar, halting a five-day rally. Futures tracking the S&P 500 rose 1.5%, while the tech-heavy Nasdaq 100 added 2.1%. Renewed hopes for faster Fed rate cuts after Monday’s global stock market slide appeared to have restored risk sentiment.

Still, cryptocurrency market watchers remain cautious about the ongoing rally among major tokens.

“We could see a corrective rally in the price of Bitcoin,” Ruslan Lienkha, head of markets at YouHodler, told CoinDesk in an email on Tuesday. “However, this upside is likely to be limited due to the prevailing pessimism in the broader markets.”

“Overall, the recent decline in Bitcoin’s price is not significantly worse than the decline in the Nikkei index, which suggests that the current sentiment is driven by external factors rather than problems in the crypto market itself,” Ruslan said. “It is unclear whether we are entering a bear market, and a lot will depend on the performance of equity markets this month.”

Bitcoin ETFs have traded about $2.5 billion so far, a lot for 10:45, but not too crazy (full history below). If you’re a bitcoin bull, you DON’T want to see crazy volume today, as ETF volume is a pretty reliable fear metric on bad days. On the other hand, deep liquidity is part of the… picture.twitter.com/TOQRjyriqp

— Eric Balchunas (@EricBalchunas) August 5, 2024

On Monday, crypto and global equity markets suffered some of their deepest losses in years, as a stronger Japanese yen caused carry to retreat and accelerated a sell-off that began last week amid geopolitical tensions in the Middle East.

Japan’s Topix 100 index posted its most significant decline since 2011. Meanwhile, Bitcoin’s yen-denominated price on Tokyo-based bitFlyer exchange fell by about 15%, significantly more than its dollar-denominated price on Western exchanges.

Institutional investors sold their spot BTC exchange-traded fund (ETF) holdings amid a day of heavy volume on Monday. The U.S.-listed offerings recorded net outflows of $168.4 million, taking net withdrawals to over $300 million this month.