The crypto market staged an impressive rebound on Tuesday, with XRP leading the charge amid a sea of green. The rally provided some much-needed relief after Monday’s painful plunge, which saw over $1 billion in futures liquidations and an 8.5% drop in the CoinDesk 20 index.
XRP Skyrockets 12% as Bitcoin Reclaims $103K
XRP was the standout performer among major cryptocurrencies, soaring 12% to pace the market recovery. The surge helped propel XRP back above the key $0.50 level as bullish momentum returned.
Meanwhile, bitcoin (BTC) climbed nearly 4% to trade around $103,000, alleviating some of the damage from Monday’s selloff. The world’s largest cryptocurrency had plummeted over 8% to start the week as AI-related concerns rocked risk assets.
Altcoins Surge as Crypto Confidence Returns
Other major altcoins joined the rally, with Cardano’s ADA, BNB Chain’s BNB, Solana’s SOL and dogecoin (DOGE) all posting gains between 5% to 9%. Ether (ETH), the second-largest crypto asset, advanced 4.5% as the market regained its footing.
The broad-based recovery lifted the total crypto market capitalization by 3%, signaling a renewed appetite for risk among traders. Monday’s steep losses had pushed the market into oversold territory, potentially setting the stage for a short-term bounce.
“Initial fears about DeepSeek presented a buying opportunity for crypto as the industry isn’t in direct confrontation with the Chinese AI firm.”
– Nick Ruck, Director at LVRG Research
Buying Opportunity Emerges After Liquidation Cascade
Some analysts view Monday’s liquidation event, which saw over $1 billion in crypto futures positions wiped out, as a signal that the market was overstretched to the downside. Such capitulation moments often present a contrarian buying opportunity once the dust settles.
As CoinDesk noted on Monday, large liquidations can indicate that a price correction has run its course, especially when combined with other technical and sentiment indicators. The sharp bounce in crypto prices on Tuesday lends credence to this view.
DeepSeek Breakthrough Among Market Movers
Still, traders are keeping a close eye on a number of factors that could sway crypto sentiment in the near term. Monday’s rout was largely attributed to breakthrough advancements from China’s DeepSeek, whose AI model outperformed industry leader OpenAI’s at a fraction of the cost.
- DeepSeek’s model beat OpenAI while using far less computing power
- Built on just $6M budget compared to OpenAI’s $6.6B funding round
- Sparks concerns about overvaluation of AI-related investments
However, some believe Monday’s DeepSeek-driven selloff was overblown when it comes to crypto assets. “Founders of crypto projects that use AI can integrate DeepSeek’s open-sourced model into their projects for more efficiency and enhanced innovations,” noted Nick Ruck of LVRG Research.
Looming FOMC Decision Keeps Markets on Edge
Beyond the AI beat, crypto traders are bracing for a packed schedule of events that could spark volatility across financial markets. All eyes are on the Federal Reserve as it kicks off its two-day policy meeting, with the rate decision due on Wednesday.
Although no rate changes are expected this time around, investors will be parsing the Fed’s forward guidance for clues on the trajectory of monetary policy. Any surprises could jolt crypto prices, which remain highly sensitive to macroeconomic developments.
“There are still choppy waters ahead as this week is heavy with macro data releases from US agencies, including the FOMC, and earnings reports from major companies such as Apple, Meta, and ASML. We remain optimistic for Bitcoin in the long term, as policies are shaping up to be very beneficial for the crypto industry’s growth in the U.S. and abroad.”
– Nick Ruck, Director at LVRG Research
Adding to the uncertainty, a slew of corporate earnings reports from tech heavyweights like Apple and Meta could sway investor sentiment in the days ahead. Strong results could boost risk appetite, while disappointing figures may weigh on crypto alongside tech stocks.
Will Bulls Keep Control as Lunar New Year Looms?
As the crypto market tries to extend its newfound momentum, some traders are turning to unorthodox methods for insight. Singapore-based QCP Capital highlighted astrological factors as the Lunar New Year approaches.
“As we approach the Year of the Snake, the market’s twists and turns remind us of the wisdom, adaptability, and resilience this zodiac symbolizes – qualities that will be essential as we navigate 2025’s challenges and opportunities.”
– QCP Capital
According to QCP Capital, the snake’s unpredictable nature could bring sudden market shifts, both to the upside and downside. Last year, the Year of the Dragon, proved highly profitable for bitcoin bulls, but not without some harrowing moments along the way.
| Zodiac Year | Bitcoin Performance |
| 2024 (Dragon) | +160% |
| 2023 (Rabbit) | -58% |
| 2022 (Tiger) | -65% |
While such celestial musings are far from scientific, they reflect the current zeitgeist in crypto markets – a mix of anticipation and trepidation as participants grapple with powerful forces both within and beyond the industry.
As Tuesday’s rally faces its first tests, crypto traders must remain nimble and adaptive to navigate the twists and turns ahead. Whether driven by terrestrial events or lunar cycles, the market’s path forward remains anything but predictable.
