Markets Breathe Sigh of Relief: Bitcoin Holds $78K as Asia-Pacific Stocks Rebound
HONG KONG/SINGAPORE – A sense of tentative calm returned to Asia-Pacific financial markets on Tuesday, with Bitcoin stabilizing near the $78,000 level and regional stock indices climbing after a volatile start to the week driven by sharp swings in precious metals.
Equity benchmarks across the region posted solid gains, led by Japan's Nikkei 225, which surged 2.5% to recoup losses from Monday's sell-off. South Korea's KOSPI advanced 4%, while futures pointed to a firmer open in Hong Kong. The broad-based recovery suggested investors were cautiously returning to risk assets after last week's whipsaw action.
The crypto market, however, bore visible scars from the recent rout. Data from CoinGlass indicated Bitcoin investors liquidated approximately $2.56 billion in positions in recent days, as digital assets were swept up in a broader retreat from risk. While the scale of liquidations remained far below the historic $19 billion unwind triggered by a Trump-era tariff announcement in 2018, the episode served as a stark reminder of how quickly leveraged bets can unravel when sentiment sours.
Attention also remained on the precious metals complex, which stabilized after a dramatic plunge. Gold rebounded 3% to around $4,800 an ounce, nearly 9% above Monday's lows, while silver climbed 5%. The violent moves were initially sparked by market reactions to former President Donald Trump's reported intention to nominate Kevin Warsh—seen as a hawkish figure—to lead the Federal Reserve, a move perceived as potentially accelerating balance sheet reduction.
"The broader flow picture suggests a clear risk-off rotation, with investors reallocating toward cash and gold amid rising macroeconomic and political uncertainty," analysts at Bitfinex noted, describing the cross-market contagion from forced position unwinding.
Providing a modest tailwind, a key gauge of US manufacturing activity expanded in January for the first time in a year, helping to steady nerves without drastically altering the outlook for future interest rate cuts. Treasury yields held steady in Asian trading.
In corporate news, Wall Street closed higher Monday, powered by chipmakers and AI-related stocks. All eyes are now on a packed earnings calendar, with AMD and Super Micro Computer reporting after the US close Tuesday.
Elsewhere, the Australian dollar held firm ahead of a central bank meeting where traders are anticipating a potential rate hike following strong inflation data. Currency markets, including the Euro and Yen, also settled after a period of dollar-driven volatility.
Market Voices: A Mixed Bag of Reactions
David Chen, Portfolio Manager in Singapore: "The rebound shows underlying resilience, but it's largely a technical recovery from oversold conditions. The fundamental triggers—uncertainty around US monetary policy and geopolitical tensions—haven't disappeared. We're advising clients to stay selective."
Maya Rodriguez, Retail Trader in Manila: "It's a relief to see green on the screen again after yesterday's bloodbath. I'm using the bounce in my tech holdings to raise some cash. The volatility in crypto and metals is a warning sign that the 'everything rally' might be on shaky ground."
James Kellerman, Independent Analyst (Blogging under 'The Skeptical Trader'): "This so-called 'calm' is a facade. The system is pumping on leverage and speculation. Warsh at the Fed? That's a recipe for a liquidity crunch. Bitcoin at $78K after billions in liquidations? This isn't stability; it's the eye of the hurricane. The real pain is being deferred, not avoided."
Professor Akira Tanaka, Economics Department, University of Tokyo: "The market reaction to a potential Fed nominee highlights the hypersensitivity to US political developments. For Asia, the stronger US manufacturing data is a double-edged sword—it supports global demand but could also delay rate cuts, keeping financial conditions tighter for longer."