Bitcoin and Ethereum rebound as new capital floods crypto

Bitcoin and Ethereum saw a strong rebound this week as new capital returned to crypto markets following the US-China tariff clash.

Bitcoin surpassed $110,000 for the first time since early October, reaching around $111,000 at press time, according to CryptoSlate data. The move represents a daily gain of 4% and reverses some of the losses that followed President Donald Trump’s announcement of new tariffs on Chinese imports.

Ethereum also broke the $4,000 mark for the first time in weeks, rising more than 4% to around $4,045, a level traders consider technically significant.

Notably, other major digital assets have joined the market momentum with their own rally.

According to CryptoSlate data, BNB, XRP, Solana, Dogecoin, Tron and Cardano each climbed between 5% and 8%, signaling a widespread resurgence rather than a Bitcoin-only rebound.

“Buy the dip”

The current rise may be linked to the current buy-on-dip sentiment prevailing in the market.

Notably, on-chain data tracked by blockchain analytics platform Lookonchain indicates that more than $6 billion worth of new stablecoins Tether’s USDT and Circle’s USDC have entered circulation since last week.

Stablecoin issuance often precedes the resumption of spot purchase activities. In this case, capital appears to shift from cash to dollar-pegged tokens to fund token accumulation.

At the same time, sentiment reflects trends in traditional markets.

Data from The Kobeissi Letter, citing Bank of America, shows that U.S. stock investors bought $3.9 billion worth of stocks last week after three straight weeks of outflows.

The firm’s analysts noted that net inflows into individual stocks reached $4.1 billion, the fifth highest since 2008 and the largest ever in a week when the S&P 500 fell at least 1%.

They added:

“This was driven by institutional inflows of +$4.4 billion, the highest since November 2022. Retail investors bought +$1.1 billion, marking their second weekly purchase in the last 6.”

The market remains cautious

Despite the uptick, Bitwise’s Crypto Asset Sentiment Index still signals a largely bearish stance, with readings consistent with what analysts call a “high risk, high reward” setup for Bitcoin.

However, the asset manager’s intraday sentiment model now shows a bullish divergence forming, which is the first sign of a near-term reversal.

Analysts at Galaxy Research echoed this cautiously optimistic tone, writing that while last week’s flash crash “significantly reduced asset prices,” the broader pattern “remains constructive.”

They wrote:

“Bitcoin remains well positioned as digital gold to capitalize on fundamental doubts regarding government fiscal and monetary prudence, while the rise of tokenization and stablecoins, coupled with an extremely favorable US regulatory outlook, should support the prospects of other important digital assets like ETH and SOL.”