Cryptocurrencies stabilized after Monday’s sharp sell-off in bitcoin jumped above $87,000 in the early US session on Tuesday.
The largest crypto rose about 3% from overnight lows, while ether underperformed by only 1.4 per cent. Altcoin majors including BNB , , showed relative strength, rising 3% to 6% overnight.
Crypto-related stocks also rose after Monday’s panicked action. Bitcoin tax firm Strategy ( MSTR ), digital brokerage Robinhood ( HOOD ) were 3%-4% higher, while Circle ( CRCL ), issuer of the $78 billion USDC stablecoin, jumped 9%.
In a rare case, crypto is outperforming US stocks, which are modestly lower across the board on Tuesday, with the S&P 500 down 0.5% and the Nasdaq down 0.3%.
In the news were delayed US employment reports, with data from November showing a worrying jump in the unemployment rate to a four-year high of 4.6%. At the moment, however, the weakness is not falling on trader expectations for a Fed rate cut in January, which remains muted with only a 24% chance.
Dead cat jump or something more?
Tuesday’s early action could offer some hope that bitcoin’s decline from last week’s high above $94,000 has been arrested in the short term, but at least one analyst sees BTC making new lows soon.
Samer Hasn, senior market analyst at broker XS.com, said BTC’s rise from the November low of $80,000 to early December was a “corrective high,” with the next leg down likely to be a new low below $80,000.
In a market note on Tuesday, he described the current environment as “crazy,” with derivatives markets underscoring caution. So the last two days saw $750 million in long liquidations, including $250 million tied to bitcoin futures, he noted.
“Traders are either stepping aside ahead of the data or being forced out, reinforcing downside momentum,” Hasn said. “Without a positive macro catalyst to reset sentiment, bitcoin remains vulnerable to a deeper flush, with levels below 80,000 increasingly part of the near-term conversation rather than a tail risk.”
“The market now faces a short-term battle between the delay in monetary easing and BTC’s long-term appeal as a store of value,” said David Hernandez, crypto investment specialist at 21shares. “Immediate selling pressure may arise as traders reassess the risk landscape, forcing BTC to defend key support zones,” he continued. “Yet the underlying economic tension reinforces the bullish case for smart money accumulation: as the Fed struggles to tame inflation without crashing the economy, bitcoin’s limited supply becomes a significant asset.”
