XRP, BNB Gain Ground as Bitcoin Bulls Aim for $90K Following Tuesday's Market Slump

Bitcoin (BTC) approached $89,000 during Asian morning hours following a 24-hour low of $86,200, slightly improving market sentiment as major tokens demonstrated signs of recovery.

XRP and BNB Chain's BNB spearheaded a gradual rebound among major tokens on Wednesday as traders continued to grapple with the aftermath of Tuesday's market turmoil, which resulted in an overall capitalization drop of up to 10% and losses exceeding $1.2 billion on bullish wagers.

XRP experienced a 3% increase, while BNB and Solana's SOL gained 5%. Dogecoin (DOGE) and Cardano's ADA showed a slight 1.2% increase, whereas Tron's TRX dropped by 5% in the past 24 hours. The broad-based CoinDesk 20 (CD20) saw a 2% decline.

The upward trend aligned with a CoinDesk analysis from Tuesday, which suggested that assets were likely oversold and could anticipate short-term relief due to a five-month low in a sentiment index and a large-scale liquidation event.

Gold decreased by 1.3% on Tuesday following a profit-taking spree after achieving a record rally where it reached a new high on Monday. However, it rose higher during Asian morning hours on Wednesday.

Macro Outlook

Factors contributing to Tuesday's panic included money flowing out of bitcoin ETFs, with over $1 billion withdrawn in the past two weeks, as well as a stronger yen, a perceived safe-haven currency whose growth tends to suppress riskier investments.

Expectations for easier U.S. Federal Monetary policy have intensified, with prediction markets estimating a 30% chance of a May rate cut over the past week, and the likelihood of two rate cuts by June has more than tripled to 15%.

These expectations arise from a decrease in U.S. consumer confidence, which fell by 7 points in February to 98.3, marking its deepest decline since August 2021 and its third consecutive drop. U.S economic data and policies typically influence the prices of risk assets such as bitcoin, as crypto traders speculate on expectations of retail participation as idle cash becomes available.

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Traders Remain Cautious

Traders remain hesitant about an altcoin rally, anticipating fresh dollar inflows to be directed exclusively towards BTC.

BTC finally broke free from its range, dipping below 90k for the first time in a month and now hovering just below that level, triggering over USD 200mm in liquidations in the past few hours.

Market sentiment continues to feel pressure following Trump's decision to impose tariffs on Canada and Mexico and limit Chinese investment. Front-end gamma was covering as BTC fell lower, with 1M implied volatility now hovering around 50v, while skews interestingly remain largely unchanged.

"Zooming out, equities, fixed income, and gold have largely disregarded the data points previously blamed for broader market weakness, with BTC remaining flat," stated Singapore-based QCP Capital in a late Tuesday broadcast message. "Rising BTC dominance and declining altcoin prices suggest that alt bulls may already be fully long, with any new dollar inflows being directed exclusively into BTC."

"We remain cautious. Recent BTC demand has been primarily driven by institutions like MicroStrategy financed through equity-linked note issuances. 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 — potentially dampening institutional demand if spot continues to stay muted," it added.

Entities such as Strategy (previously MicroStrategy) have been the primary drivers of BTC demand in recent weeks and months, funding their purchases by raising their stock. However, companies may find it challenging to justify further purchases as the hype isn't boosting prices. Decreased institutional buying could cool off BTC demand and cause significant investors to withdraw, further impacting the market.

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