Bitcoin Stages Modest Recovery Amid Broad Crypto Market Pressure
Bitcoin (BTC) managed to pare some of its sharp weekend declines during Monday's U.S. trading session, though the cryptocurrency and its peers remained firmly in negative territory for the week. The flagship digital asset traded around $78,700 by midday, marking a 7% recovery from its weekend low near $75,000 but still reflecting a more than 10% drop compared to last Monday's levels.
The weekend sell-off, which saw over $2 billion in crypto derivatives positions liquidated in a rapid burst, "was notable for its speed and depth, breaking key short-term support levels even by volatile weekend standards," noted Adrian Fritz, Chief Investment Strategist at 21Shares. He attributed the move primarily to a cascade of forced deleveraging rather than discretionary selling in spot markets, a dynamic that accelerated downward momentum.
Ether (ETH) mirrored Bitcoin's tentative daily bounce, gaining about 2% over the past 24 hours, yet it remains down nearly 19% week-over-week. The modest recovery in crypto prices failed to lift beleaguered crypto-related stocks. Shares of Robinhood (HOOD) tumbled 9%, while Circle (CRCL), Coinbase (COIN), and MicroStrategy (MSTR) were down between 3% and 5%.
The pressure on digital assets contrasted with gains in traditional markets, where the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all advanced. This divergence highlights the ongoing decoupling between crypto and traditional risk assets in the current macro environment. Meanwhile, precious metals gold and silver remained volatile after experiencing their worst single-day drop in decades last Friday.
Economic Backdrop: Manufacturing Surprise and Jobs Data in Focus
Adding to the complex market landscape, a key gauge of U.S. factory activity surprised to the upside. The ISM Manufacturing Purchasing Managers' Index (PMI) jumped to 52.6 in January, signaling the first expansion in the sector in a year and the strongest reading since 2022. Analysts caution that January often sees elevated readings due to post-holiday reordering, a pattern observed in recent years.
All eyes now turn to Friday's U.S. jobs report for January. The data will be scrutinized for clues on the Federal Reserve's next move after policymakers held rates steady last week, with investors keen to gauge the timing of any potential future rate cuts.
Market Voices:
"This is a classic dead-cat bounce fueled by shorts covering," said Marcus Thorne, a veteran trader at Hudson River Capital. "The underlying structure is weak. Until we reclaim $82,000 with conviction, this remains a sell-the-rally market."
"The deleveraging was brutal but necessary to wash out excess speculation," commented Lina Park, a portfolio manager at Digital Horizon Fund. "It creates a healthier foundation. The PMI data is encouraging for broader risk sentiment, which could eventually benefit crypto."
"It's a farce!" exclaimed retail investor David Chen on social platform X. "Stocks hit record streaks while we get liquidated into oblivion on manufactured volatility. The whole system is designed to shake out the little guy before the next institutional pump."
"The correlation between crypto stocks and the underlying assets has broken down recently," observed Sarah Wilkinson, a fintech analyst at Berenson & Co. "Equity investors are pricing in regulatory overhang and earnings risk separately from token price movements, which is a sign of the market maturing, albeit painfully."