Bitcoin It returned near $69,000 on Wednesday, up more than 10% from Tuesday’s low as crypto markets staged a broad relief rally after a prolonged period of pessimism.
Ethereum’s Ether (ETH), The native token of Solana (SOL) and All posted double-digit gains, leading to a move that caught many traders leaning in the wrong direction.
Digital asset stocks, which had been struggling in the past months amid falling crypto prices, also enjoyed a relief rally. Stablecoin issuer Circle (CRCL) surged 34% after its earnings report, while crypto exchange Coinbase (COIN) jumped 14%. Strategy& (MSTR), the largest corporate holder of bitcoin, climbed 9%, and ether treasury firm BitMine advanced 12%.
The broad-based rally provided a welcome relief after weeks of relentless selling pressure and fears of the next leg of the decline.
Nevertheless, analysts cautioned that despite the sharp surge in tokens and equities, crypto markets are still not out of the woods, with key resistance levels and macro risks still looming.
According to Joel Kruger, market strategist at LMAX Group, although there was no immediate catalyst behind Wednesday’s move, extreme fear and bearish conditions in the crypto markets were prime conditions for a violent countertrend advance.
“Crypto assets have been under severe pressure in recent months and a technical bounce awaits,” he wrote. “The market had built up a meaningful strategic short bias, making it vulnerable to intense pressure on limited headlines.”
Still, Kruger cautioned against calling the rebound the start of a sustainable uptrend just yet.
“Given the sudden nature of the rally and the absence of a clear trigger – especially in the backdrop of thin liquidity conditions – advance caution should be exercised,” he said.
chasing the rally
Joshua Lim, global co-head of markets at FalconX, said the options market on his desk is seeing huge demand for bullish bets on Ether. Specifically, traders are buying call options and call spreads in the $2,000-$2,200 range over the next two to three weeks, looking for more bullish profits in the near term.
Lim said some funds are “chasing this rally” by rotating into high-volatility altcoins and using options to magnify potential profits – a sign that risk appetite has increased sharply following the recent rebound.
Adding some complexity, approximately 115,000 BTC options worth $7.49 billion will expire at the end of the month on Friday. Wintermute OTC trader Jasper De Maire said the so-called “maximum pain” – the price level where the largest number of options expire worthless – is currently around $75,000. The “maximum pain” point can sometimes act as a magnetic level in expiration, he said, although the dealer’s position appears weak.
“Fundamental indicators still remain unconvincing on whether there is much more to see after this consolidation,” De Maire said.
watchable level
Technically, Bitcoin faces stiff resistance in the $70,000 and $72,000 areas, where recent rallies have stalled as sellers stepped in. Getting over those levels will be the first challenge in turning the bounce into a sustainable move.
Bitfinex analysts also pointed to $78,000, where the “True Market Mean,” an onchain valuation metric for estimating Bitcoin’s fair value based on actual capital flows into the network, currently sits.
Bitfinex analysts said that level must be reclaimed on a sustained weekly basis before the structural picture improves.