At dawn on Monday, global markets experienced significant volatility, with Japanese stock indexes witnessing their worst opening in 40 years. European indexes opened with losses ranging from 3% to 5%, and the American stock market is also facing its most challenging days since the COVID-19 pandemic amid recession fears.
After declines of 20-30%, cryptocurrencies started to recover by Monday afternoon and evening, with meaningful price increases beginning to emerge on Tuesday morning. Bitcoin surpassed the $56,000 resistance level, and several altcoins surged by 30-40%.
The market is recovering
Asian stocks, cryptocurrencies, and U.S. stock index futures rebounded on Tuesday morning, showing signs of recovery from one of the worst trading days in years.
Among larger-capitalization cryptocurrencies, Solana’s native token, SOL, is noteworthy, having risen by 25% and now challenging the $145 resistance. BNB jumped by 18%, and XRP experienced a 15% increase in the last 24 hours. In the smaller cryptocurrency sector, Bittensor is up 50%, Akash Network has risen by 42%, and Render gained 35%, although all three are still down more than 20% compared to last week.
Stock market indexes are stabilizing
Yesterday morning, the Japanese yen reached a local peak against the U.S. dollar at 142 yen; however, the Asian currency has continued to weaken against the leading global currency, with the dollar exchange rate stabilizing around 146 yen.
Japan’s two primary stock indexes, the Nikkei 225 and TOPIX, fell by more than 20% yesterday—an occurrence not seen since 1987. However, by Tuesday morning in Europe, the value of these indexes had rebounded by 10% each.
The futures for the American stock market are also showing positive signs, with the S&P 500, Nasdaq, and Dow Jones Industrial Average expected to open 1.5% to 2% higher. While the American situation appears to be the least concerning, with index values comparable to May 2024, the increasing likelihood of a recession could prompt an emergency interest rate cut by the FED, which many analysts are advocating for. Based on the current situation, a 50 basis point interest rate cut at the September 18 FOMC meeting is highly anticipated. Some analysts believe that after two quarters of recession, the markets may present a favorable entry point, though this remains to be seen.
Crypto market participants are exercising caution
Digital assets often lead the recovery following major declines; however, cryptocurrency market participants advise caution during this volatile period. There is a consensus that, in the medium to long term, the current market conditions are favorable, but corrective recovery may be limited due to prevailing market pessimism.
“It can be said that the recent decline in the price of Bitcoin is not significantly worse than the decline in the Nikkei index, which indicates that the current sentiment is not driven by issues within the crypto market but by external factors,” said Ruslan Lienkha, market manager at YouHodler.
Attention should be paid to the behavior of spot ETFs, as there is dual pressure on the market. If institutional investors decide to buy stable assets, it may be worthwhile to follow their lead.
At dawn on Monday, global markets were shaken by considerable volatility, as Japanese stock indexes suffered their worst opening in the last 40 years, European indexes opened with a loss of 3-5%, and the American stock market is also experiencing its worst days since the COVID-19 epidemic, amid the threat of recession.
After a 20-30% fall, cryptocurrencies started to catch up on Monday afternoon and evening, but the first real green candles only arrived on Tuesday morning, when Bitcoin crossed the $56,000 resistance, with several altcoins rallying, showing gains of 30-40%.
The Market is Regenerating
Asian stocks, cryptocurrencies, and U.S. stock index futures exhibited a remarkable rebound on Tuesday morning, signalling recovery from one of the worst Monday trading days in years.
Among cryptocurrencies with larger market capitalizations, notable performers include Solana (SOL), which surged by 25% and is now battling the $145 resistance. BNB, experiencing an 18% appreciation, and XRP, which is up 15% in the last 24 hours, have also displayed a positive trend. In the realm of smaller cryptocurrencies, Bittensor skyrocketed by 50%, Akash Network increased by 42%, and Render saw a 35% boost, although all three projects remain over 20% down compared to last week.
The Stock Market Indexes Are Stabilizing
Yesterday morning, the Japanese yen hit a local peak against the US dollar, trading at 142 yen per dollar, before continuing its decline to around 146 yen. The Nikkei 225 and TOPIX indexes fell over 20%, a decline not witnessed since 1987. However, by Tuesday morning European time, both indexes bounced back, increasing by 10% each.
American stock market futures are becoming increasingly optimistic, with predictions for a 1.5% to 2% rise in the S&P 500, Nasdaq, and Dow Jones Industrial Average. Despite the overall situation being less dire in the U.S., there are whispers of a potential emergency interest rate cut by the Federal Reserve, a move many analysts anticipate due to the rising recession concerns. Current sentiments suggest a more than likely 50 basis point cut during the September 18 FOMC meeting.
Crypto Market Players Are Cautioning
Historically, digital assets have quickly recovered after major downturns, but cryptocurrency market participants emphasize the importance of caution in this volatile environment. While many agree that current market conditions present significant long-term opportunities, they also highlight the possibility of limited corrective recovery due to prevailing pessimism in financial markets.
“It can be said that the recent decline in the price of Bitcoin is not significantly worse than the decline in the Nikkei index, indicating that the current sentiment is not caused by problems in the crypto market, but by external factors.” – Ruslan Lienkha, market manager of YouHodler
Tracking Market Behavior
The performance of spot Exchange-Traded Funds (ETFs) will be closely monitored, as they bear significant influence over market momentum. A decisive purchase from institutional investors could provide the necessary traction for stability.
Benefits of Monitoring Global Markets
- Informed Trading Decisions: Staying attuned to global market fluctuations provides insights that can guide traders in making informed investment choices.
- Market Timing: Awareness of market cycles lets traders recognize potential entry points for buying at lower prices.
- Risk Management: Understanding the interrelationships between cryptocurrencies and traditional markets can help mitigate risks during downturns.
Practical Tips for Crypto Investors
- Diversify Your Portfolio: Avoid putting all your funds in one cryptocurrency. Diversifying reduces risks associated with market swings.
- Set Stop-Loss Orders: Protect your investments by utilizing stop-loss orders to minimize potential losses.
- Stay Updated: Keep track of market news, trends, and macroeconomic factors that may impact cryptocurrency prices.
Summary of Current Market Performance
| Cryptocurrency | Price Movement | Percentage Change in Last 24 Hours |
|---|---|---|
| Bitcoin (BTC) | Crossed $56,000 Resistance | +30% |
| Solana (SOL) | Fighting $145 Resistance | +25% |
| BNB | Market Recovery | +18% |
| XRP | Rapid Growth | +15% |
| Bittensor | Notable Surge | +50% |
| Akash Network | Strong Performance | +42% |
| Render | Robust Increase | +35% |
Conclusion
The rapid changes in both the stock and cryptocurrency markets present a mix of opportunities and challenges for investors. As we navigate this volatile economic landscape, it is essential to stay informed and remain vigilant. By doing so, investors can position themselves to not only survive but thrive in these turbulent times.
