Why Did Bitcoin Recover By 8% Overnight? – – Daily Cryptocurrency and FX News

BTC/USD 1-hour candle chart (Bitstamp). Source: Tradingview

Bitcoin rebounded by more than 8% overnight on March 1 after a sharp drop over the weekend. Several reasons could be responsible for this rally together with various macro factors. The main reasons that the experts and analysts highlight as responsible for the rebound include the rising Coinbase premium, the recovering global stock market, and a typical weekend reversal.

BTC/USD 1-hour candle chart (Bitstamp). Source: Tradingview

Rising Global Stock Market Meets Weekend Reversal

The global stock market has begun its recovery with the markets opening on March 1. In the past week, the stock market slumped as a result of the rising Treasury yield curve. While the bond market was rallying, the risk-on assets, like stocks, experienced a pullback.

Holger Zschaepitz mentioned that the global risk markets kicked off the week strongly as the bond yields eased. He mentioned:

“Global risk markets start the week on the front foot as bonds rally. Australia’s 10y yield fell 25bps, German 10y drops 3bps ahead of inflation data. US 10y steady at 1.41%. Following last week’s bloodbath, easing in bond yields is a big relief. Gold gains to $1757. #Bitcoin at $46.8k.”

Even though Bitcoin is considered a haven asset and a store of value, it mostly moves similarly to the risk-on market. The trend happens since the market capitalization of bitcoin is still hovering between $900 billion and $1 trillion. But, bitcoin’s market valuation is still quite small compared to the haven assets like gold.

Therefore, there is a high likelihood that it would be more affected by macro factors in the short-term. Santiment analysts explained:

“The relationship between the price of #Bitcoin and traditional stocks remains higher than the historical norm. As we’ve noted in previous data studies, $BTC’s rallies tend to be the most prominent when this correlation turns negative, as it did in December, 2021.”

Bitcoin price fluctuation with the S&P 500. Source: Santiment
Bitcoin price fluctuation with the S&P 500. Source: Santiment

This concurrent recovery of the cryptos and global stock markets followed a minor correction in the crypto space over the weekend. Previously, when the bitcoin price drops hard during the weekend, bitcoin normally sees a relief rally in the following week.

The price action mostly happens since there is normally lower volume during the weekend. Thus, the trend can change steeply whenever a new weekly candle emerges.

Coinbase Premium Resurfaces

In the last24 hours, the Coinbase premium rebounded to almost $100. Before that reversal, Coinbase was selling at a lower price than Binance. This meant that there was strong selling pressure coming from the United States.

Based on previous reports, the futures funding rate resetting signaled that the market became lesser overheated. It coincided with the Coinbase premium returning which means it was a strong signal of boosting appetite for Bitcoin, mainly in the US.

Coinbase premium. Source: CryptoQuant
Coinbase premium. Source: CryptoQuant

Whenever the price of bitcoin trades lower on Coinbase, that is a sign of near-term bearishness since the US dollar pair mainly trades higher than Tether. In the short term, looking at the recovering stock market trend and the constantly high Coinbase premium, the cryptocurrency space has a great chance of rebounding later this week.

Whale clusters. Source: Whalemap
Whale clusters. Source: Whalemap

Whale clusters seen on Whalemap also show that $46K and $56K are the critical support and resistance zones in the short term. Since bitcoin managed to rebound strongly from $46,000, it might likely rally to $56,000 in the next impulsive wave.

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