Author: Mia, ChainCatcher

Editor: Marco, ChainCatcher

After the bloody Monday, the global market welcomed a slight respite today.

The Asian stock market opened strong on Tuesday, with the Nikkei Index leading the gains and the TOPIX Index also rising sharply. The benchmark Nikkei 225 Index in Japan rose by more than 8%, recovering some of the ground lost after a 12% drop on Monday; the Australian stock market remained relatively flat; US stock index futures also rose, with the Nasdaq 100 Index futures expanding to 2%.

At the same time, the cryptocurrency market also showed signs of a rebound. In the past 24 hours, the total global cryptocurrency market value has risen to above $2 trillion, and the price of BTC has returned to over $55,000.

Despite investors' concerns about the slowing US economy and geopolitical risks, they are actively seeking buying opportunities on dips.

Urgent Firefighting

After the global market experienced a hellish plunge on Monday, investors were in panic, and the President of the Chicago Fed, Charles Evans, and the President of the San Francisco Fed, Mary Daly, came forward to "put out the fire" in an attempt to soothe investors' emotions.

Evans emphasized that the July non-farm payroll report only represents "one piece of data," and although the employment data was weaker than expected, it does not indicate that the economy has entered a recession. Daly also pointed out that the US job market remains robust, and they will wait for more data to decide whether to take action. At the same time, she revealed that the FOMC will maintain an open attitude towards rate cuts at the next meeting.

Currently, traders in the market generally believe that there is a 74% chance of a 50 basis point rate cut by the Fed at the next policy meeting in September, and a 27% chance of a 25 basis point rate cut. According to CME's FedWatch tool, earlier on Monday, the expectation of a 50 basis point rate cut had been completely absorbed by the market, and at that time of panic, a 75 basis point rate cut was also considered possible.

Analysts have given different explanations for this rebound in the market.

Some analysts believe that this is because investors are gradually calming down from the panic about the impending recession in the US economy, thereby adjusting their investment strategies for the Asian market. On Monday, the ISM Services PMI index for July released by the Institute for Supply Management rebounded to 51.4, meeting market expectations, further alleviating market concerns.

On the other hand, the rebound in the Japanese stock market on Tuesday may also be related to the gradual easing of arbitrage trading frenzy. Chris Weston, research director at brokerage firm Pepperstone, predicted before the opening of the Japanese stock market that the shocking historic movements in the Asian market on Monday were mainly due to the large-scale liquidation of margin positions. Therefore, he expected a strong rebound in the market after the opening on Tuesday. However, he also warned that after such intense leverage adjustments, major Japanese banks have suffered heavy losses, and now only the bravest may dare to enter the market.

Cryptocurrency: Across-the-Board Rebound

The total global cryptocurrency market value has risen to $2.06 trillion, with BTC breaking through $56,000, narrowing its 24-hour decline to 0.24%. Old-school altcoins led by SOL and BNB also saw a general rise, with gains of around 8% in the past 24 hours. Currently, BNB has rebounded to $480, with a 24-hour gain of 9.5%; Sol has rebounded to above $140, with a nearly 15% gain in 24 hours.

In response, Galaxy's research director Alex Thorn remains confident in the bull market and said, "Although this decline seems severe, its magnitude is comparable to the declines during previous bull markets."

Matt Hougan, CEO of Bitwise, also compared this weekend's crash to the crash in March 2020 in an article, believing that yesterday's sell-off is a buying opportunity.

On the other hand, this rebound is also closely related to the contrarian trading strategy of whales. Some whales are buying on the dip in this round of decline, and their behavior often foreshadows future trends.

Currently, the amount of Bitcoin withdrawn from exchanges by whales has reached the highest level in nine years, and in July alone, whale holders increased their holdings by 84,000 BTC.

According to @ai_9684xtpa's monitoring, the whale who bought 58,400 ETH at an average price of $2265 since May 2023 made another move to buy the dip nine hours ago, withdrawing 6,000 ETH from Binance, worth $13.82 million, with a cost of about $2304.

In addition, an address suspected to belong to Justin Sun also withdrew 14,884 ETH from Binance today, worth about $34.7 million. Currently, Justin Sun holds over 700,000 ETH.

Currently, ETH has rebounded to above $2400, briefly touching $2500, with a 24-hour decline narrowing to 6.77%.

Compared to old-school altcoins, some newer narrative-based altcoins have shown weaker rebounds, and investors are mostly adopting a wait-and-see attitude towards them.

According to data, TON's price fell by 17% last month, and according to Santiment's data, the number of whales holding a large amount of TON tokens increased by 2% in the past month. However, TON's rebound is relatively weak, with a 3.3% gain in the past 24 hours.

What's the Future Direction?

Despite the rebound in the market, investors still need to remain cautious.

The current situation may provide good long-term entry opportunities, but in the short term, the rebound in the global market may still face some uncertainty.

Markus Thielen, founder of 10x Research, said that if the current economic weakness further deteriorates into a recession, the price of Bitcoin may fall to $42,000.

In addition, despite the rise in Asian stock markets and the cryptocurrency market, market sentiment remains fragile.

Business analyst Jill Schlesinger pointed out that most stock market indices hit new highs in mid-July, and since then, there have been concerns that the stock market bubble may be burst.

However, in the long run, the direction of the global market will depend more on fundamental factors. US professional investors still maintain a positive outlook on the development of BTC and ETH, and the contrarian trading strategy of whales may also indicate future upward trends.

Some analysts pointed out that there are currently no signs of an economic recession in the market, and the Japanese interest rate hike has not directly affected the US market, with limited impact on the cryptocurrency market. Market sentiment is greatly influenced by trading emotions, but US stocks have already started to rebound.

Daniel Cheung, co-founder of Syncracy Capital, also optimistically stated, "It is expected that cryptocurrencies will recover relatively quickly, as most of the recent sell-offs were forced and entirely due to panic. Ironically, the entrance to a bigger bull market has already opened."

In addition, analysts also stated that BTC and ETH in CME are maintaining a positive premium, and even though the premium is large, it has not had an impact on spot prices, which may indicate little interest from hedge funds or no significant hedging activity. The positive premium in CME indicates that US professional investors still have a positive outlook on the development of BTC and ETH. Although CME is an arbitrage tool, a widening price spread does not necessarily lead to liquidation. In the long run, the focus of the market is still on investors' expectations for the future.

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