Bitcoin (BTC) Neears $89,000 as Market Sentiment Improves

Bitcoin (BTC) neared $89,000 in Asian morning hours after a 24-hour low of $86,200, slightly improving market sentiment with major tokens showing signs of a recovery.

Bitcoin (BTC) price hovered above the $89,000 mark in Asian morning hours on Wednesday, recovering slightly from a 24-hour low of $86,200 as major tokens showed signs of a recovery.

CoinDesk 20

The move was noted as major crypto tokens recovered from Tuesday’s losses.

XRP and BNB Chain’s BNB led a gradual majors rebound Wednesday as traders continue to digest Tuesday’s carnage — one that saw overall capitalization drop as much as 10% and at least $1.2 billion in losses on bullish bets.

XRP was trading up 3%, while BNB and Solana’s SOL advanced 5%. Dogecoin (DOGE) and Cardano’s ADA showed a slight 1.2% gain, while Tron’s TRX was down 5% over the past 24 hours. The broad-based CoinDesk 20 (CD20) was down 2%.

The move higher was in line with an analysis by CoinDesk on Tuesday, as a five-month low in a sentiment index and a large-scale liquidation event signaled that assets were likely oversold and could see some relief in the short term.

Gold futures fell 1.3% on Tuesday after a profit-taking bout following a record rally where it touched a new high on Monday, but was noted to be pulling higher in Asian morning hours on Wednesday.

Macro Outlook

Reasons for Tuesday’s panic ranged from money flowing out of bitcoin ETFs, with over $1 billion pulled out in the last two weeks, to a stronger yen, a perceived safe-haven currency whose growth tends to pull down riskier bets.

However, expectations for easier U.S. Federal Monetary policy have surged, with prediction markets putting chances of a May rate cut to 30% over the past week, and the chances of two rate cuts by June more than tripling to 15%.

These hopes follow a gauge of U.S. consumer confidence marking its deepest fall since August 2021, as the Conference Board said its index decreased 7 points to 98.3 last month in its third straight decline.

U.S economic data and policies tend to impact prices of risk assets such as bitcoin, as crypto traders factor in expectations of retail participation as idle cash increases.

Traders Remain Cautious

Still, hopes for an altcoin rally remain muted among traders, with fresh dollar inflows largely expected to flow into BTC.

BTC finally broke out of its range, dipping below 90k for the first time in a month and now is seen pinging just below that level, which triggered over USD 200mm in liquidations over the past few hours.

Market sentiment remains under pressure following Trump’s decision to impose tariffs on Canada and Mexico and to curb Chinese investment. Front-end gamma was covering as BTC broke lower, with 1M implied volatility now back around 50v, skew interestingly largely unchanged.

“Zooming out, equities, fixed income and gold have largely shrugged off the data points previously blamed for broader market weakness, with BTC also remaining largely flat. Rising BTC dominance and sliding altcoin prices suggest that alt bulls may already be fully long, and any new dollar inflows will likely go into BTC. We remain cautious. Recent BTC demand has been driven primarily by institutions like MicroStrategy (NASDAQ:MICRO) financed through equity-linked note issuance. With crypto-related issuance accounting for roughly 19% of total issuance over the last 14 months, the market for such financing may be nearing saturation, which could dampen institutional demand if spot continues to stay muted,” Singapore-based QCP Capital said in a broadcast message late on Tuesday.

Players like Strategy (previously MicroStrategy) have been the main drivers of BTC demand in the past weeks and months, funding their purchases by selling their stock. But here’s the issue: companies might struggle to justify more purchases since the hype isn’t increasing prices.

Less institutional buying could diminish BTC demand, potentially leading to large investors liquidating their positions, which could further impact the market.