The cryptocurrency market found some relief as US markets stepped in to provide much-needed support and liquidity. This intervention helped calm a panicked market, with Bitcoin (BTC) and Ethereum (ETH) showing signs of recovery.
The BTC & ETH Recovery
After a period of intense selling pressure, cryptocurrency prices rebounded. Bitcoin climbed back to $56,000, while Ethereum reached $2,500. This recovery was largely driven by strong spot buying on Coinbase. The positive sentiment wasn’t limited to cryptocurrencies. Japan’s stock market surged 9% after a notable drop the previous day, and US futures indicated a potential rebound.
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These movements were partly influenced by US data showing expansion in the service sector for July. However, QCP Capital is cautioning against premature optimism. The VIX, often called the “fear index,” remains above 30, indicating that volatility is still a concern.
Can the market recover from this point?
Experts suggest that asset prices are likely to stay unpredictable until there’s more clarity on policy decisions from the Federal Reserve and the Bank of Japan.
Key events to watch include an update from Bank of Japan Deputy Governor Uchida on Wednesday and the Fed’s Jackson Hole conference from August 22-24. These events could provide crucial insights into future monetary policies, potentially impacting market direction.
While there have been whispers about a possible emergency rate cut, analysts believe this is unlikely. Such a move could undermine the Fed’s credibility and potentially reinforce market panic.
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