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Crypto markets experience volatility overnight

TL;DR

  • Crypto markets swung overnight, with Bitcoin and Ethereum dropping, then bouncing back by 15%.
  • Spot transactions drove demand, showing real interest beyond speculation, while Dogecoin surged after Coinbase’s announcement.
  • Despite losses, major tokens recovered, boosted by a dovish Fed stance, highlighting market unpredictability and digital asset evolution.

Crypto markets witnessed significant volatility overnight, with Bitcoin (BTC) and Ethereum (ETH) experiencing sharp declines followed by a notable recovery, trading as much as 15% above their Wednesday lows.

Market recovery and token performance

BTC and ETH surged 11% within 24 hours, leading to gains among major tokens. Other cryptocurrencies, such as Solana’s SOL, Cardano‘s ADA, and Binance Coin’s BNB, also saw gains of up to 8%, according to data from CoinGecko. The CoinDesk 20 Index, reflecting the broader crypto market, reported a recent increase of 7.62%.

Layer-2 platform tokens, built on Ethereum, exhibited an average surge of 25% in the past 24 hours, while meme coins followed suit with a 16% jump, as per CoinGecko data.

The market downturn began during early Asian trading hours due to profit-taking following last week’s rally and a wave of leveraged bets on higher prices. This led to a decrease in overall capitalization by over 15% within the past week. Some traders pointed out technical downtrends in Bitcoin, signaling potential further losses.

Sentiment shifted later in the day after U.S. Federal Reserve Chair Jerome Powell’s FOMC speech conveyed a dovish tone. Despite hotter-than-expected inflation figures, the central bank maintained its outlook for three rate cuts this year.

Spot transactions driving demand

Singapore-based trading firm QCP Capital noted that buying was primarily led by spot transactions, indicating genuine demand rather than speculative trading, which is common in futures markets. According to QCP, BTC spot ETF flow data in the coming hours will confirm the spot demand trend.

Dogecoin (DOGE) witnessed an 18% surge after a March 7 filing from prominent crypto exchange Coinbase went viral, revealing plans to offer futures for DOGE, Litecoin (LTC), and Bitcoin Cash (BCH) as early as April 1. Some traders interpreted this move as a potential precursor to a spot DOGE exchange-traded fund (ETF).

In its filing, Coinbase emphasized that DOGE has evolved beyond its origins as a meme token, asserting its enduring popularity and active community support and suggesting its status as a significant player in cryptocurrency.

The overnight volatility in cryptocurrency markets underscored the ongoing unpredictability inherent in the sector. Despite initial declines, major tokens like BTC and ETH managed to stage significant recoveries, with sentiment buoyed by dovish remarks from the Federal Reserve. Spot transactions emerged as a primary demand driver, indicating genuine interest in cryptocurrencies beyond speculative trading. 

The surge in Dogecoin following Coinbase’s announcement further highlights the evolving landscape of digital assets and the potential for mainstream adoption. As the market evolves, investors remain vigilant amid fluctuations, emphasizing the importance of staying informed and adaptable in navigating the crypto landscape.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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James Kinoti

A crypto enthusiast, James finds pleasure in sharing knowledge on fintech, cryptocurrency as well as blockchain and frontier technologies. The latest innovations in the crypto industry, crypto gaming, AI, blockchain technology, and other technologies are his preoccupation. His mission: be on track with transformative applications in various industries.

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