5 min readBitcoin has extended its V-shaped recovery from 83k, testing 93k for the second time in a week. The largest cryptocurrency trades 6% higher over 24 hours. The bullish move is seen across the crypto sector, with Ethereum trading 9% higher over the same period and Solana jumping 12%. The total cryptocurrency market capitalisation has risen 7% to $3.14 trillion.
Why has Bitcoin rebounded?
Bitcoin and the broader crypto market have recovered from a steep selloff on Monday. The recovery comes after a strong Japanese bond auction early on Tuesday, which helped lower Japanese bond yields and ease worries about the unwinding of the yen carry trade (whereby investors borrow in the low-interest-rate yen to invest in higher-yielding, riskier assets). The unwinding of the carry trade could suck liquidity from the market. Therefore, these concerns easing helped to soothe worries over liquidity. At the same time, the Fed ended its QT programme, injecting liquidity back into the market. Crypto is particularly sensitive to liquidity levels.
Furthermore, Vanguard lifted its long-standing ban on trading Bitcoin. This marks a dramatic shift in stance from its previous position, in which executives argued that crypto lacks intrinsic value, produces no cash flow, and therefore doesn’t fit long-term retirement strategies. The firm now allows trading of Bitcoin, Ether, XRP, Solana and other regulated ETF funds.
Institutional demand remains weak.
Spot BTC ETFs continued to show weak interest from institutional investors. According to the SoSoValue data spot, BTC ETFs recorded only 58.5 million in net inflows on Tuesday. While this marked the fifth consecutive day of inflows, the levels remain low, particularly compared with the $3.48 billion in net outflows last month. This points to a disconnect between price action and investor conviction.
ETF participation is often considered a proxy for institutional sentiment, and the current trend suggests a degree of scepticism rather than strong confidence. ETF flows need to ramp up in order for Bitcoin to make a solid recovery.
BTC needs to rise above this level…
BTC needs to rise above the 95k level to determine whether this is another dead cat bounce or a meaningful recovery.
Ethereum’s Fusaka upgrade goes live today – Can it trigger a rally?
The Ethereum’s Fusaka upgrade went live on December 3 and is Ethereum’s second major network upgrade, following the Pectra hard fork in May.
The Fusaka hard fork combines the Osaka execution-layer upgrade and the Fulu consensus-layer update, bringing improvements to Ethereum’s scalability, security, and user experience. The changes support higher transaction volumes across both Layer-1 and Layer-2 solutions within the Ethereum ecosystem.
The Pectra upgrade sparked a 29% rally in ETH. Investors will be watching closely to see whether this latest update spurs a similar reaction. However, the Fusaka upgrade prioritises infrastructure scalability over Pectra’s more visible improvements. Therefore, the reaction could be more muted.
Where next for ETH/USDT
ETH/USTDT trades within a falling channel dating back to early October. The price has recovered from the 2715 low and is testing 3100, last week’s high. The RSI is pointing higher.
Buyers will look to rise above 3200, the 61.8% Fib retracement of the 2110 low and 4955 high. Above here 3500, the 200 SMA and the 50% fib retracement comes into play, with a rise above here creating a higher high.
Sellers need to break below 2700 to create a lower low, opening the door to 2110.
Trading involves risk.
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