After the liquidity-driven crypto market crash over the February 1 weekend, the market is showing signs of recovery.
Bitcoin price is up 4% today, trading around $78,456, while top altcoins, led by Ethereum, have gained 4-5% each.
The rally comes as the US-India trade deal advances and geopolitical tensions ease, with the US and Iran set to hold talks on February 6.
On February 2, the cryptocurrency market came under heavy selling pressure, with Bitcoin crashing to $75,000.
However, the market has rebounded, adding over $100 billion to its overall market capitalization in the past 24 hours.
According to Coinglass data, total liquidations reached $324 million in the last 24 hours, with $231 million coming from short positions. It will be interesting to see if this rally can maintain its momentum moving forward.
The macroeconomic outlook appears positive as the United States and India ease long-standing trade tensions. The two countries have reached a trade agreement that reduces tariffs on India from 50% to 18%.
Geopolitical tensions between the United States and Iran appear to have eased somewhat. The Washington Post reports that White House special envoy Steve Witkoff and Iranian Foreign Minister Abbas Araghchi are scheduled to meet in Istanbul on February 6.
The talks aim to ease tensions, prevent a possible U.S. military strike and revive the nuclear deal that stalled last June.
Turkey, Qatar, Egypt and other Middle Eastern countries will mediate the diplomatic efforts.
On Monday, February 2, White House officials met with crypto companies and banking representatives to try to break the impasse over a crypto market structure bill.
After crashing all the way to $75,000, Bitcoin price is showing a relief recovery and is currently trading at $78,701.
On the weekly chart, BTC fell below the 20- and 50-week moving averages, signaling weak momentum.
Analyst Bull Theory outlined two main scenarios. In the bullish case, Bitcoin holds the April 2025 low and forms a low around $75,000, keeping the broader uptrend intact.
A decisive weekly close above the 50-week MA near $100,400 would suggest momentum has reestablished in favor of buyers.
In the bearish scenario, a break below the April 2025 low would invalidate the lower structure.
This creates downside risk for Bitcoin, potentially pushing its price towards the $50,000-$60,000 range.
The overall direction of the crypto market depends on Bitcoin’s ability to maintain $75,000 at weekly closes.
Read original story Crypto market rising $100 billion, Bitcoin’s next step and key factors to watch by Bhushan Akolkar on Coinspeaker.com
