Cryptocurrency prices crawled back on Tuesday as investors bought the dip and as Japan’s Nikkei 225 index bounced back by over 10%. On Monday, Ondo Finance’s token rose by over 45% from its lowest point and was trading at $0.7265.
ONDO, Solana, and Celestia TIA are rising
Similarly, Solana price jumped by 27% from this week’s low and was trading at $140 while Celestia TIA rose to $5. Ponzio the Cat, zkSync, AAVE, and Stellar (XLM) were other top-performing tokens.
These tokens jumped as Bitcoin staged a strong recovery. After bottoming at $49,300, BTC jumped to $56,000 as investors bought the dip. Most importantly, Bitcoin has formed an important hammer pattern, which is characterized by a long lower shadow and a body. In most cases, this is one of the top bullish patterns in the market.
The rebound also coincided with the rally in Japanese stocks and the recovery of some American technology companies. Data shows that the Nikkei 225 index jumped by 10% on Tuesday and was trading at 34,350 yen. The Japanese yen also softened to 145 from this week’s high of 141.7. Stocks like Nvidia and Tesla rose by over 3% in the pre-market session.
This rebound is happening because Monday’s sell-off was mostly exaggerated and based on fear. Indeed, the crypto fear and greed index slumped to 35, its lowest point in months, as the sell-off continued.
Federal Reserve rate cut hopes
Also, Monday’s crash and Friday’s weak jobs numbers were actually bullish for stocks and cryptocurrencies. With the hopes of the US recession rising, there is a chance that the Federal Reserve will intervene by slashing interest rates.
On Monday, Professor Jeremy Siegel of Wharton recommended that the Fed slash rates by 75 basis points before its official meeting in September. UBS, Jefferies, and ING analysts have also suggested that the Fed should deliver more rate cuts.
Cryptocurrencies and stocks thrive when the Fed is slashing interest rates, as we saw in 2020. Most tokens surged even though the market was experiencing a black swan event due to the COVID-19 pandemic.
However, there is a risk that the ONDO, Solana, and Celestia TIA’s rebound is a dead cat bounce. In technical analysis, this is a situation where a declining asset bounces back briefly and then resumes the downtrend.
Dead cat bounces are highly popular in the crypto market because most participants are usually retail investors.
