The current crypto bull market is shaping up to be different from all previous ones as Bitcoin (BTC) and the majority of higher cap altcoins have bounced back from yesterday’s flash crash after BTC hit a new all-time high, and are once again rising in trading on Wednesday.
Historically, sizeable pullbacks after a new ATH have taken weeks, if not months, for the crypto market to recover from, but heavy inflows into spot BTC ETFs continue to push the price action higher, while experienced crypto traders enjoy the benefits of rotating their BTC profits into low-cap tokens.
Stocks also rallied at the market open as traders looked to make up for yesterday’s declines, which were inspired by comments from Fed Chair Jerome Powell that rate cuts are likely to be warranted “at some point” in 2024, a far cry from earlier expectations of up to six cuts this year, with the first coming as early as March.
The CME FedWatch Tool now shows that investors are giving the odds of a rate cut in June 68.9%, with only a 22% chance of a rate cut in May.
At the closing bell, the S&P, Dow, and Nasdaq all finished in the green, up 0.51%, 0.20%, and 0.58%, respectively.
Data provided by TradingView shows that after regaining support at $63,300 late on Tuesday, Bitcoin’s price spiked back above $67,000 in the early hours on Wednesday and has experienced volatile trading around that support level since.
BTC/USD Chart by TradingView
Kitco senior technical analyst Jim Wyckoff noted that March Bitcoin futures prices were trending higher during the early U.S. trading hours after “Prices hit a contract and multi-year high” on Tuesday.
Bitcoin futures 1-day chart. Source: Kitco
“The bulls still have a solid overall near-term technical advantage amid a price uptrend in place on the daily bar chart,” Wyckoff said. “There are no substantial, early technical clues to suggest that a market top is close at hand.”
Leverage cleared, rally resumes
“Last night saw the much-anticipated washout with mass liquidations in the highly leveraged perps,” said analysts at QCP Capital, who noted that Bitcoin hit a low of $59,224 while Ethereum (ETH) bottomed out at $3,205.
“But the bounce has been extremely impressive, particularly in ETH which continued to new highs today ($3,897.20 high so far),” they said. “With some of the leverage taken out, the path higher has now opened up and we look to a near-term break higher as the uptrend resumes immediately.”
“Surprisingly, while perp funding is relatively lower (around 50% level), the rest of the forward curve is higher which makes the spot-forward spread trade even more attractive than before the overnight washout!” the analysts added.
According to market analyst CryptoChiefs, following Bitcoin’s flash crash, “Each 4-hour [candle] has held the Monthly Open ($61,250) and we have seen a very strong reaction from that level overnight, with BTC looking like it wants to go back to the highs again.”
“Keep an eye on the Developing Month Value Area High (DM VAH) which is now sitting at $66.3k,” CryptoChiefs said. “This has just been reclaimed, and if each 4-hour [candle] holds this level as support we could see a move towards $70k.”
MN Trading founder Michaël van de Poppe also sees the potential for a move towards $70,000, but warned it would likely be a “liquidity sweep” followed by a drop back into the $60,000s as the pre-halving rally is nearing its end.
From a technical perspective, we're close to the end of the pre-halving rally for #Bitcoin.
Macroeconomic data is likely going to have an impact this month + the pre-halving rally finishing off.
What's next? We'll sweep to $70K and take liquidity as a scenario. pic.twitter.com/9LcxfIUOQC— Michaël van de Poppe (@CryptoMichNL) March 6, 2024
That said, Poppe encouraged his followers to “Just sit down and relax,” as this bull market is still in the early stages, and volatility and sizeable corrections are to be expected.
“Bitcoin ran from $25,000 to $69,000 in less than four months. Altcoins are on cycle lows in their BTC valuations. Liquidity flushes happen, and these corrections are harsh and painful,” Poppe said. “The markets are at the start of a bull. Use the dips. Wait.”
Altcoins roar higher
The altcoin market was a sea of green on Wednesday as data provided by CoinMarketCap shows that all of the tokens in the top 200 were trading higher on the day, with more than 100 seeing double-digit increases.
Daily cryptocurrency market performance. Source: Coin360
Decentralized finance (DeFi) protocols have emerged as the leaders in the rebound rally, with Ribbon Finance (RBN) and 0x Protocol (ZRX) up 60.7% and 40%, respectively, while meme coin dogwifhat (WIF) gained 39%, AIOZ Network climbed 38.1%, and AI-related projects Fetch.AI (FET) and Render (RNDR) increased 36.6%.
The overall cryptocurrency market cap now stands at $2.52 trillion, and Bitcoin’s dominance rate is 52.4%.
