Monday witnessed a resurgence across leading cryptocurrencies that coincided with advances in equities and precious metals, signifying an uplift in investor risk tolerance. Bitcoin (BTC) rose 1.93% to trade around $78,710, while Ethereum (ETH), the second largest cryptocurrency by market capitalization, gained 2.72%, reaching approximately $2,341. Similarly, XRP and Dogecoin (DOGE) showed notable recoveries, with DOGE advancing 3.30% to about $0.1075.
Following a harsh sell-off that significantly negated the so-called "Trump rally" post-election gains, Bitcoin exhibited a notable rebound on increased trading volume—up by 35%. Despite this bounce back, Bitcoin still faces resistance, with $85,000 cited as a pivotal level where short sellers face potential liquidation risks exceeding $300 million.
Ethereum has shown signs of upward momentum but continues to encounter stiff resistance near $2,400, maintaining pressure on its short-term price movements. Other cryptocurrencies such as XRP and DOGE also participated in the positive trend, trading within green territory.
In contrast to the digital assets rally, equities associated with the cryptocurrency sector experienced declines. Strategy Inc. (NASDAQ:MSTR) and Bitmine Immersion Technologies Inc. (NYSE:BMNR), for example, closed the trading day down 6.73% and 9.16%, respectively.
Market volatility persisted as over $550 million was liquidated within a 24-hour period according to Coinglass data, predominantly through long position liquidations. This volatility underscores the transitional state of the market, oscillating between fear and optimism. The Crypto Fear & Greed Index currently reflects "Extreme Fear," indicating prevailing market apprehension despite some price recoveries.
Among specific cryptocurrencies outside the major ones, some notable short-term performers included Ziliqa (ZIL), which surged 27.48% to $0.005192; Stacks (STX), rising 16.58% to $0.2985; and Keeta (KTA), increasing 13.69% to $0.2857. These gains contributed to pushing the global cryptocurrency market capitalization to approximately $2.65 trillion, marking a 2.27% rise in the last day.
Equity markets also showed positive momentum, with key indices ending on an upbeat note. The Dow Jones Industrial Average increased by 515.19 points, or 1.05%, closing at 49,407.66. The S&P 500 rose 0.54% to 6,976.44, while the Nasdaq Composite lifted by 0.56% to close at 23,592.11.
Precious metals followed suit, reversing prior weekend declines. Spot gold advanced 3% to approximately $4,789.09 per ounce, and spot silver appreciated 4.50% to near $82.74 an ounce, suggesting a broader market appetite for safe-haven assets alongside riskier investments.
Amid these mixed signals, blockchain analytics firm CryptoQuant has identified indicators consistent with a bear market for Bitcoin. Key among these is the "Supply In Loss" metric, which currently exceeds 44%. Historically, such readings have not been common during typical market pullbacks but tend to emerge in the early phases of sustained downward trends. The firm emphasized that the current Bitcoin price behavior deviates from mid-cycle corrections observed in prior cycles.
However, analyst Michaël van de Poppe counters this bearish perspective by pointing out that the Bitcoin bull market does not typically conclude when the U.S. Manufacturing Index dips below 50. He highlighted that the index was near 50 in January, a scenario reminiscent of the beginning phase of the 2016-2017 Bitcoin bull market. Citing these parallels, he expressed confidence in the cryptocurrency's prospects, projecting a strong bull market for another one to two years.
Market volatility remains a defining characteristic of the current environment. Trader Matt Maley remarks on the active and rapid shifts, highlighting his trade alerts that capitalize on sharp selloffs and swift rebounds. These alerts identify short-term trading opportunities which often close within a matter of days, illustrating the importance of agility in navigating the crypto markets today.