Bitcoin (BTC) zoomed above $56,000 early Tuesday amid a broader market recovery in Asia as bargain hunters stepped in after Monday's steep price slide.

CoinGecko data shows that BTC added 6%, its highest 24-hour price increase since May, triggering a wider market recovery. Ether (ETH) and XRP (XRP) added 8%, BNB Chain’s BNB rose 12%, and Solana’s SOL surged as much as 16%.

The broad-based CoinDesk 20 (CD20), a liquid index of the largest tokens by market capitalization minus stablecoins, jumped 7.26% and recorded over $95 million in trading volumes.

Japan's Topix jumped about 10% as the yen weakened against the U.S. dollar, snapping a five-day surge. Futures tracking the S&P 500 rose 1.5%, while the tech-heavy Nasdaq 100 jumped 2.1%. Renewed hopes for faster Fed rate cuts in the wake of Monday's global market slide seem to have restored risk sentiment.

Still, crypto market watchers remain cautious about a continued rally among major tokens.

“We might see a corrective rebound in Bitcoin's price,” Ruslan Lienkha, chief of markets at YouHodler, told CoinDesk in a Tuesday email. “However, this increase will likely be limited due to the prevailing pessimism in the broader markets.”

“Overall, the recent drop in Bitcoin's price is not significantly worse than the decline in the Nikkei index, indicating that the current sentiment is driven by external factors rather than issues within the crypto market itself,” Ruslan said. “It is unclear if we are entering a bearish market, and much will depend on the performance of the equity markets this month.”

On Monday, the crypto and global stock markets experienced one of their deepest losses in recent years. A strong Japanese yen triggered an unwinding of carry trades, accelerating a sell-off that started last week due to geopolitical tensions in the Middle East.

Japan’s Topix 100 index posted its most significant drop since 2011. Meanwhile, bitcoin's yen-denominated price on the Tokyo-based bitFlyer exchange dropped nearly 15%, significantly more than its dollar-denominated price on Western exchanges

Institutional investors sold off spot BTC exchange-traded fund (ETFs) holdings amid a heavy volume day on Monday. The U.S.-listed products recorded $168.4 million in net outflows, bringing net withdrawals to over $300 million this month.

Source : CoinDesk - Aug 6, 2024