Bitcoin Approaches $89K as XRP, BNB Lead Recovery After Market Turmoil

Bitcoin (BTC) edged closer to $89,000 in early Asian trading hours on Wednesday, rebounding from a 24-hour low of $86,200. This slight uptick has helped improve market sentiment, with major cryptocurrencies showing signs of stabilization following Tuesday’s dramatic sell-off.

XRP and BNB Chain’s BNB spearheaded the recovery among top digital assets, as traders continued to digest Tuesday’s downturn, which saw the total crypto market capitalization plummet by 10% and triggered at least $1.2 billion in liquidations from bullish positions.

XRP climbed 3%, while BNB and Solana’s SOL posted gains of 5%. Dogecoin (DOGE) and Cardano’s ADA recorded modest increases of 1.2%, whereas Tron’s TRX was still down 5% over the past 24 hours. Meanwhile, the broader CoinDesk 20 (CD20) index remained 2% lower.

This rebound aligns with a CoinDesk analysis from Tuesday, which noted that a five-month low in a sentiment index, coupled with a wave of liquidations, indicated that assets were likely oversold and primed for a short-term recovery.

Macroeconomic Factors at Play

Tuesday’s market volatility was driven by multiple factors, including capital outflows from Bitcoin ETFs, which have seen over $1 billion in redemptions over the past two weeks. Additionally, a strengthening Japanese yen—often considered a safe-haven currency—has weighed on riskier assets such as cryptocurrencies.

Despite these challenges, expectations for a more accommodative U.S. monetary policy have risen. Prediction markets now estimate a 30% probability of a Federal Reserve rate cut in May, while the likelihood of two rate cuts by June has more than tripled to 15%.

These expectations gained traction following a sharp drop in U.S. consumer confidence, which fell by seven points in February to 98.3—the steepest decline since August 2021. As crypto traders anticipate increased retail participation driven by loosening monetary conditions, risk assets like Bitcoin may see renewed buying pressure.

Caution Prevails Among Traders

While Bitcoin’s dominance continues to rise, hopes for a broad-based altcoin rally remain subdued. Analysts suggest that fresh capital inflows are being directed primarily toward BTC rather than alternative cryptocurrencies.

Bitcoin briefly dipped below the $90K level for the first time in a month before stabilizing, triggering over $200 million in liquidations in recent hours. Market sentiment remains fragile, particularly in light of recent policy moves by former U.S. President Donald Trump, including new tariffs on Canada and Mexico and tighter restrictions on Chinese investments.

“Equities, fixed income, and gold have largely brushed off the macroeconomic concerns that previously weighed on markets, yet Bitcoin remains range-bound,” noted Singapore-based trading firm QCP Capital in a late Tuesday broadcast. “The rise in BTC dominance alongside declining altcoin prices suggests that altcoin traders may already be fully positioned, with new liquidity largely flowing into Bitcoin.”

QCP Capital also expressed reservations about Bitcoin’s near-term prospects, citing a potential slowdown in institutional demand. Companies like Strategy (formerly MicroStrategy) have been major BTC buyers in recent months, leveraging equity-linked note issuances to fund acquisitions. However, with crypto-related capital raises accounting for nearly 19% of total issuance over the past 14 months, analysts warn that the market for such financing could be reaching a saturation point.

As institutional appetite cools, Bitcoin’s rally could face headwinds, with fewer large-scale buyers stepping in to support prices. The coming weeks will be crucial in determining whether BTC can sustain its momentum or if further market corrections lie ahead.