Bitcoin and Ethereum rebound as fresh capital floods crypto

Both Bitcoin and Ethereum experienced a significant rebound this week as new capital flowed back into the crypto markets following the US–China tariff news.

Bitcoin surged above $110,000 for the first time since early October, hitting around $111,000 at the time of writing, according to data from CryptoSlate. This 4% daily increase helped recover some of the losses that occurred after President Donald Trump’s tariff announcement.

Ethereum also crossed the $4,000 mark, climbing over 4% to approximately $4,045, a level that traders consider to be crucial from a technical standpoint.

Additionally, other major cryptocurrencies joined the market rally.

According to CryptoSlate, BNB, XRP, Solana, Dogecoin, Tron, and Cardano all saw gains ranging from 5% to 8%, indicating a widespread resurgence instead of just a Bitcoin-driven bounce.

‘Buy the dip’

The current market sentiment of “buying the dip” seems to be driving this upward trend.

On-chain data from Lookonchain suggests that over $6 billion in new Tether’s USDT and Circle’s USDC stablecoins have entered circulation in the past week.

This increase in stablecoin issuance often precedes renewed buying activities. It appears that funds are moving from cash reserves into dollar-pegged tokens to support token accumulation.

This sentiment aligns with trends in traditional markets as well.

According to The Kobeissi Letter, referencing Bank of America data, US equity investors purchased $3.9 billion in stocks last week after three consecutive weeks of outflows.

Analysts at the firm noted that net inflows into individual stocks reached $4.1 billion, the fifth-highest since 2008 and a record high for a week when the S&P 500 dropped by at least 1%.

They further stated:

“This was driven by institutional inflows of +$4.4 billion, the most since November 2022. Retail investors bought +$1.1 billion, marking their 2nd weekly purchase out of the last 6.”

Market remains cautious

Despite the recent uptick, Bitwise’s Cryptoasset Sentiment Index continues to indicate a generally bearish stance, suggesting a “high-risk, high-reward” scenario for Bitcoin.

However, Bitwise’s intraday sentiment model now shows a bullish divergence emerging, indicating an early sign of a short-term reversal.

Galaxy Research analysts echoed this cautiously optimistic view, stating that while last week’s sudden drop “impacted asset prices significantly,” the overall outlook “remains positive.”

They explained:

“Bitcoin continues to be well positioned as a digital gold asset, benefiting from doubts about government fiscal and monetary policies, while the growth of tokenization and stablecoins, combined with favorable US regulatory conditions, should support the prospects of other major digital assets like ETH and SOL.”