Things to know: In early U.S. trading on Tuesday, the crypto market stabilized, with bitcoin rising about 3% from late Monday afternoon and breaking through $87,000. Crypto-related stocks, including Strategy (MSTR), Robinhood (HOOD), and Circle (CRCL), saw gains in early trading after plunging yesterday. Despite the rebound, one analyst warned that the crypto market remains "fragile" and bitcoin could fall below its November lows.
After Monday's sharp sell-off, cryptocurrencies stabilized, with bitcoin BTC$87,755.51 rebounding above $87,000 in early U.S. trading on Tuesday.
The largest cryptocurrency rose about 3% from its overnight low, while ethereum ETH$2,966.00 underperformed, rising only 1.4%. Major altcoins including BNB BNB$875.71, XRP$1.9429, and SUI$1.5235 performed relatively strongly, rising 3% to 6% overnight.
Compared to Monday's panic trading, crypto-related stocks also rebounded. Bitcoin financial company Strategy (MSTR) and digital broker Robinhood (HOOD) rose 3%-4%, while Circle (CRCL), issuer of the $78 billion USDC stablecoin, jumped 9%.
In a rare instance, cryptocurrencies outperformed U.S. stocks, which edged lower overall on Tuesday, with the S&P 500 down 0.5% and the Nasdaq down 0.3%.
The news mentioned the delayed U.S. jobs report, with November data showing the unemployment rate rising to 4.6%, the highest in four years. For now, this weakness has not affected traders' expectations for a Federal Reserve rate cut in January, which remains at a slim 24% probability.
Dead cat bounce or something deeper?
Early trading on Tuesday may have offered some hope that bitcoin's slide from last week's high of $94,000 has been contained in the short term, but at least one analyst believes bitcoin will soon hit new lows.
Samer Hasn, Senior Market Analyst at XS.com, said bitcoin's rebound from the November low of $80,000 to early December was a "corrective high," and the next downturn could see new lows below $80,000.
In Tuesday's market report, he described the current environment as "fragile," with the derivatives market highlighting this caution. He noted that there had been $750 million in long liquidations over the past two days, including $250 million related to bitcoin futures.
"Traders are either choosing to stay on the sidelines ahead of data releases or are being forced out, which has intensified downward momentum," Hasn said. "Without a positive macro catalyst to reset market sentiment, bitcoin still faces the risk of deeper sell-offs, and levels below $80,000 are increasingly becoming a focal point of near-term discussion rather than a tail risk."
"The market now faces a short-term struggle between delayed monetary easing and bitcoin's long-term appeal as a store of value," said David Hernandez, crypto investment expert at 21shares. "As traders reassess the risk environment, immediate selling pressure may emerge, forcing bitcoin to defend key support zones," he continued. "However, underlying economic tensions reinforce the bullish case for smart money accumulation: with the Federal Reserve striving to control inflation without crashing the economy, bitcoin's limited supply becomes an important asset."
