Crypto Market Shows Signs of Stability as Downtrend Slows: Factors Behind Potential Recovery

In the past week, Bitcoin (BTC) managed to surpass significant resistance levels, indicating that the market is stabilizing after a tumultuous period. Analysts are left speculating about what could potentially spark the next rally.

In the latest Bitfinex Alpha report, experts suggest that fluctuations in the macroeconomic environment could channel liquidity toward Bitcoin. Considerable volatility in traditional assets like oil and fiat currencies may lend stability to the crypto market, potentially driving positive price movements in the near future.

Crypto Market Stabilization

According to Bitfinex, last week BTC traded below the short-term holders’ cost basis of $113,600, which aligns around the 0.85 quantile level. This trend suggested market fatigue and diminishing momentum. However, positive developments over the weekend, particularly discussions about tariffs between the U.S. and China, helped Bitcoin reclaim its resistance levels.

Maintaining a position above $113,600 remains crucial for Bitcoin to shift from a defensive to a bullish market structure.

While traders remain hopeful for a positive turnaround at this pivotal level, the historical data suggests that further declines may be ahead. Persistent weakness below the STH cost basis has often hinted at deeper corrections toward the 0.75 quantile, now sitting close to $97,500.

Currently, BTC is trading around $114,400, but a drop beneath $113,600 could lead to a decline toward $97,500 – marking the lower boundary of this consolidation phase. Analysts agree that such a drop would align with prior cycle trends and might signify the end of selling pressure, paving the way for the next upswing.

Macro Landscape and Its Impacts

With changes in energy prices and currency markets influencing global liquidity, cryptocurrencies are beginning to absorb some of the rotating capital as institutional traders analyze and may shift their investments from bonds and equities toward digital assets.

Further Reading:

There has been a notable rise in oil prices and a depreciation of currencies such as the Japanese yen, which, combined with geopolitical unrest, has driven investors to reevaluate their risk exposures.