By Omkar Godbole (All times ET unless indicated otherwise) The crypto market has steadied over the past two days, with bitcoin briefly topping the 200-day simply moving average at $84,000

The crypto market has steadied over the past two days, with bitcoin briefly topping the 200-day simply moving average at $84,000

The crypto market has steadied over the past two days, with bitcoin briefly topping the 200-day simply moving average at $84,000 early today.

softer-than-expected U.S. CPI release on Wednesday aided the sentiment by validating traders' pricing of four interest-rate cuts by the Federal Reserve this year.

The past 24 hours' recovery was led by the memecoin sector, followed by tokens of layer-1 and layer-2 blockchains as well as AI tokens, according to data source Velo.

Still, issues such as President Trump's tariffs, U.S. recession concerns and the bond-market volatility that recently rocked risk assets, including BTC, remain to cast doubt on the sustainability of the market recovery. That said, at least two factors suggest otherwise.

The first is the quarter-end rebalancing. The Nasdaq and S&P 500 are down 6% and 4.8%, respectively, this quarter, while the 10-year Treasury note is up 5%. That means funds mandated to maintain a specific asset allocation mix are now overweight bonds and will probably rebalance by buying equities and selling bonds as the quarter end nears.

Those actions will push bond yields and stock prices higher and could bode well for bitcoin and the broader crypto market, given the strong correlation between BTC and the technology stocks.

The other factor is the yen, which has come under pressure since CoinDesk noted the potential for renewed crypto market stability on the back of overstretched bullish positioning in the Japanese currency. The yen, seen as a haven investment, may remain under pressure as the potential quarter-end rebalancing lifts U.S. bond yields. In other words, risk-off stemming from the JPY strength and the resulting unwinding of the yen carry trades may be over for now.

Positive net global liquidity could also grease risk-taking.

"Net global liquidity, largely due to China and the U.S., is increasing," Two Prime, an SEC-registered investment adviser, said in a Telegram chat. "This may counteract some of the effects of the yen trade’s unwind. In addition, as the U.S. gets its own rates and inflation under better control, which has already started to incrementally trend down over the past few months, it will reduce pressure on other central bank bonds and slow rate growth on yen borrow."

Still, traders need to be vigilant for volatility, as Deribit's BTC-listed options market tracked by Amberdata shows significant negative dealer gamma between $81,000 and $87,000. Dealers are likely to trade in the direction of the market to maintain their overall exposure neutral, adding to price swings.

The U.S. is set to publish the February producer price index (PPI) report and the weekly jobless claims later today. A hotter-than-expected PPI, representing pipeline inflation, may inject downside volatility into risk assets. Stay alert!

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