Crypto markets steadied on Wednesday after a volatile start to the week, finding modest support from an improvement in broader risk sentiment even as investors remained cautious about the near-term outlook.

Total crypto market capitalization rose about 1.7% over the past 24 hours to roughly $2.65 trillion, according to CoinMarketCap. The stabilization followed sharp swings earlier in the week, when thin liquidity and a wave of liquidations pushed prices sharply lower before dip buyers stepped in.

Bitcoin traded above $78,000 during Asian and early European sessions, around 5% above Monday’s lows. The rebound, however, stalled near resistance levels that have capped upside since early February, limiting momentum and reinforcing skepticism about the durability of the move.

The uneven price action has kept sentiment defensive, with traders struggling to extend recoveries beyond narrow ranges.

Altcoins showed mixed performance. BNB led gains after renewed support from Binance founder Changpeng Zhao, while dogecoin advanced following fresh commentary from Elon Musk. Most other major tokens posted modest rebounds but remained well below levels reached earlier this year.

The cautious tone in digital assets mirrored broader markets. Asian equities pared earlier losses after U.S. tech stocks slid overnight, as investors rotated toward 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 disrupt traditional software-as-a-service business models.

Commodities added another layer to the risk backdrop. Oil prices rose after the U.S. Navy shot down an Iranian drone headed toward an aircraft carrier in the Arabian Sea, injecting fresh geopolitical risk. Gold rebounded above $5,000 an ounce on dip buying, while the yen weakened as traders positioned ahead of Japan’s upcoming election.

Flows data continued to highlight caution across crypto markets. CoinShares reported $1.7 billion in outflows from global crypto investment products last week, marking the second consecutive week of heavy redemptions. Bitcoin products accounted for the bulk of withdrawals, followed by ether and other major tokens.

On-chain indicators also point to defensive positioning. Long-term bitcoin holders have slipped into unrealized losses, a condition CryptoQuant associates with “extremely bearish” phases that can sometimes precede local bottoms. Options markets show early signs that traders are positioning for a potential stabilization.

Corporate crypto exposure remains under scrutiny. Ether’s recent decline has pushed unrealized losses at major holders higher, with BitMine’s paper losses nearing $7 billion, while some institutional investors have begun trimming positions. Others, including Strategy, continue to accumulate bitcoin despite ongoing volatility.

For now, crypto’s rebound remains tentative, with traders focused on whether broader risk markets can provide enough support to turn a fragile recovery into a more durable trend.