Bitcoin has risen more than 26% from its low point. Has the market finally bottomed out?

Luccy

24-08-09 11:17

Read this article in 10 Minutes

AI summary

View the summary

After the 85 crash, the crypto market finally emerged from the shadows. Bitcoin gradually recovered and broke through $62,000, with a 24-hour increase of 12.67%, and an increase of more than 26% from the lowest point ($49,000). Ethereum broke through $2,700, with a 24-hour increase of 15%.

As the market rebounded, altcoins saw a general rise, including: SUI 24-hour increase of 34%; REZ 24-hour increase of 32%; SAGA 24-hour increase of 25.4%; TAO 24-hour increase of 24%; BANANA 24-hour increase of 21.4%; TIA 24-hour increase of 21.6%; SEI 24-hour increase of 21%. According to CoinGecko data, the total market value of cryptocurrencies has rebounded to $2.24 trillion, with a 24-hour increase of 7.2%.

Why is it rising?

Putin "calls orders", Russia's cryptocurrency mining is legalized

According to TASS, Russian President Putin signed a law on the legalization of cryptocurrency mining in Russia on August 8. The signed law introduces new concepts, including digital currency mining, mining pools, mining infrastructure operators, address identifiers, and individuals who organize mining pool activities.

According to the document, only registered Russian legal entities and individual entrepreneurs have the right to mine, and individuals who are not included in the register but do not exceed the energy consumption limit set by the Russian government are also entitled to engage in cryptocurrency mining. Foreign digital financial assets can be traded on Russian blockchain platforms, and the Russian Central Bank will have the right to ban certain issuances if it finds a threat to Russia's financial stability.

The law means the legalization of cryptocurrency mining in Russia. Earlier, Putin discussed the introduction and use of cryptocurrencies with the government at a meeting on economic issues. He pointed out that this is a promising economic area and Russia must "seize the opportunity" to quickly establish a legal framework and supervision, develop infrastructure, and create conditions for circulation.

The possibility of a rate hike in Japan is reduced

QCP Capital's latest report pointed out that the deputy governor of the Bank of Japan downplayed the possibility of another rate hike in the near future, providing an opportunity for the crypto market to recover.

JPMorgan Asset Management said the Bank of Japan will avoid raising rates again in the short term, and further tightening may depend on the direction of the U.S. economy. "There is actually a path for the Bank of Japan to act again, but that is a path where the Fed cuts rates and tries to stabilize the U.S. economy," said Seamus Mac Gorain, the firm's global head of rates. "Of course, if the U.S. goes into recession, that's a dead end."

Mac Gorain believes further tightening of monetary policy may not happen until 2025. In an interview, he said the Bank of Japan could make a series of rate hikes, but it depends on having a fairly benign global backdrop. "Obviously, the Bank of Japan will not act until the market stabilizes," Mac Gorain said. "It certainly depends on whether the U.S. and global economy can avoid a recession."

Ripple ruling boosts sentiment

U.S. District Judge Analisa Torres of the Southern District of New York ruled that Ripple did not violate federal securities laws by selling XRP to retail investors through its trading platform. But Ripple's 1,278 institutional sales transactions violated securities laws and fined it $125.035 million.

Since the amount was far lower than the $1 billion in illegal gains and pre-judgment interest and $900 million in civil penalties required by the SEC, Ripple saw the result as a victory over the U.S. Securities and Exchange Commission (SEC). The ruling boosted market sentiment and cryptocurrencies rose slightly again.

But according to Coindesk, although the Ripple case is allegedly over, the U.S. Securities and Exchange Commission (SEC) is expected to appeal the ruling, which means that the relevant legal matters may be prolonged.

Is the market recovering?

This crypto market pullback once again shows that the market lacks confidence in Ethereum. Before and after the Jump sell-off market fell, several market makers chose to sell Ethereum.

According to ARKHAM data, the GSR Markets on-chain public address reduced its Ethereum holdings by more than 706 in the week before the crash, and transferred more than 1,000 Ethereum to exchanges such as Binance between August 1 and August 2. After the "85" crash, it still reduced its holdings by more than 100 ETH, but the reduction of other altcoins was not obvious.

Amber Group increased its holdings of ETH in large quantities, but panic-sold when the crash occurred, and transferred all the Ethereum it had increased a few days ago, more than half of which went directly to the exchange. Flow Traders transferred a large amount of Ethereum to the chain the day before, but immediately transferred a large amount to the exchange the day after, sold ETH in time, and bought the bottom of Bitcoin at the same time.

But some analysts believe that the market is improving. The day after the "85" plunge, according to TheBlock report, after Monday's turmoil, more than $1 billion in leveraged funds have been cleared, and the value of major tokens has fallen by as much as 20%. In the past 24 hours, the global cryptocurrency market value has increased by more than 5% to $2.04 trillion. The market has shown initial signs of recovery. Coinbase researcher David Duong said: "We believe that market uneasiness will persist in the short term, but shorts may be squeezed, which may lead to a market rebound in the next few days." Duong emphasized that "the current market correction does not mean the beginning of a new long-term trend, but is consistent with its defensive strategy for the third quarter of 2024, and more positive market performance is expected in the fourth quarter." Chris Burniske, former head of Ark Invest crypto and current partner of Placeholder VC, said on social media that "while sentiment is reset and leverage is cleaned, the lows of most high-quality crypto assets are significantly higher than the lows of 2023 At the same time, central banks around the world are about to be forced to ease policy, and although there may be some volatility in the third quarter, this is a good early bull market layout anyway. 」