Crypto prices stabilized on Wednesday after a volatile start to the week, tracking a tentative improvement in broader risk-on sentiment, although traders remained cautious on near-term direction.
The total crypto market capitalization rose about 1.7% over the past 24 hours to about $2.65 trillion, according to CoinMarketCap data. The recovery followed strong fluctuations earlier in the week, where thin liquidity and heavy liquidations pushed prices down significantly before the buyers stepped in.
Bitcoin traded above $78,000 during Asian and early European hours, about 5% higher than Monday’s lows, although gains stopped near resistance levels that have been on the upside since early February.
The choppy price action has reinforced bearish sentiment among short-term traders as the market struggles to extend rebounds beyond narrow ranges.
Altcoins showed mixed performance. BNB led gains, helped by renewed support from Binance founder Changpeng Zhao, while dogecoin also advanced following new mentions by Elon Musk. Elsewhere, most major tokens posted modest recoveries but remained well below levels earlier this year.
The cautious tone in crypto mirrored broader markets. Asian shares earlier took losses after US technology stocks fell overnight as investors rotated towards more economically sensitive sectors such as financials and industrials.
The pullback in U.S. stocks was driven by concerns that rapid advances in artificial intelligence could undermine traditional software-as-a-service business models.
In commodities, oil prices rose after the US Navy shot down an Iranian drone heading for an aircraft carrier in the Arabian Sea, adding a geopolitical layer to markets that were already on edge. Gold rose above $5,000 per ounces on buying a fall, while the yen weakened as traders positioned themselves ahead of Japan’s weekend election.
Flow data continued to paint a cautious picture for crypto.
CoinShares reported that global crypto investment products saw $1.7 billion in outflows last week, marking the second straight week of heavy redemptions. Bitcoin funds accounted for the bulk of withdrawals, followed by ether and other major tokens.
Meanwhile, onchain indicators suggest that positioning is becoming increasingly defensive. Long-term bitcoin holders have fallen into unrealized losses, a condition that CryptoQuant associates with “extremely bearish” phases that may precede local bottoms.
Options markets are also showing early signs that traders are positioning themselves for a potential stabilization.
Corporate crypto exposure remained under scrutiny. Ether’s fall has pushed unrealized losses at major holders higher, with BitMine’s paper losses approaching $7 billion, while some institutional investors have begun trimming positions. Others, such as Strategy, continue to accumulate bitcoin despite the volatility.
So far, crypto’s rebound looks fragile, with traders looking to see if broader risk markets can provide enough support to turn a shaky bounce into something more durable.
