Cryptocurrency prices stabilized on Wednesday after a volatile start to the week, following a tentative improvement in broader risk sentiment, even as traders remained cautious about the near-term direction.
The total crypto market capitalization increased by around 1.7% in the last 24 hours to approximately $2.65 trillion, according to data from CoinMarketCap. The rally followed wild swings earlier in the week, when tight liquidity and heavy sell-offs pushed prices lower before buyers intervened.
Bitcoin traded above $78,000 during Asian and European hours, up about 5% from Monday’s lows, although gains stalled near resistance levels that have limited the upside since early February.
The choppy price action has reinforced bearish sentiment among short-term traders, with the market struggling to extend bounces beyond tight ranges.
Altcoins showed mixed performance. BNB led the gains, helped by renewed support from Binance founder Changpeng Zhao, while dogecoin also advanced after fresh mentions from Elon Musk. Elsewhere, most major tokens posted modest recoveries but remained well below levels seen earlier this year.
The cautious tone in cryptocurrencies reflected broader markets. Asian stocks pared earlier losses after U.S. technology stocks fell overnight, with investors rotating into more economically sensitive sectors such as financials and industrials.
The pullback in U.S. stocks was driven by concerns that rapid advances in artificial intelligence could undermine traditional software-as-a-service business models.
In commodities, oil prices rose after the US Navy shot down an Iranian drone heading towards an aircraft carrier in the Arabian Sea, adding a geopolitical layer to markets that were already on edge. Gold recovered above $5,000 an ounce on dip buying, while the yen weakened as traders positioned themselves ahead of this weekend’s Japanese elections.
Flow data continued to paint a cautious picture for cryptocurrencies.
CoinShares reported that global crypto investment products saw outflows of $1.7 billion last week, marking the second consecutive week of large redemptions. Bitcoin funds accounted for the majority of withdrawals, followed by ether and other major tokens.
Meanwhile, onchain indicators suggest that positioning is becoming increasingly defensive. Long-term bitcoin holders have fallen into unrealized losses, a condition that CryptoQuant associates with “extremely bearish” phases that can precede local lows.
Options markets are also showing early signs that traders are positioning for possible stabilization.
Corporate exposure to cryptocurrencies remained under scrutiny. Ether’s decline has increased unrealized losses for major holders, with BitMine’s paper losses approaching $7 billion, while some institutional investors have begun trimming positions. Others, like Strategy, continue to accumulate bitcoins despite the volatility.
For now, the cryptocurrency rebound appears fragile, with traders watching to see if broader risk markets can provide enough support to turn a shaky rebound into something more durable.
