Crypto Market Rebounds Post-Nvidia Report, Alt Season Looms

22. Feb 2024 Posted by Guest on News

Earlier this week, the cryptocurrency market surged to multi-month highs only to experience a slight downturn, followed by a swift recovery early on Thursday. Traders seized profits while market observers closely monitored the earnings report of chipmaker Nvidia (NVDA), anticipating it to serve as a significant catalyst for market movements.

Bitcoin saw a dip to $50,700 late on Wednesday, with ether also dropping below $2890 before rebounding from some of the losses. Among major cryptocurrencies, Polygon’s MATIC took the biggest hit, sliding by 7%, while Cardano’s ADA and XRP experienced declines of up to 5%.

Market sentiment turned bearish in anticipation of Nvidia’s fourth-quarter earnings, which ultimately surpassed expectations, sparking a rally in artificial intelligence (AI) tokens. These tokens experienced heightened activity last week following the launch of OpenAI's Sora product. The collective market capitalization of AI tokens exceeded $15 billion, with Worldcoin’s WLD reaching a record high.

The erratic price movements triggered over $200 million in liquidations of crypto-tracked futures, with $150 million stemming from long positions betting on higher prices. Subsequently, shorts, or bets on lower prices, were affected as the market rebounded post-Nvidia's report.

Many traders viewed the sell-off as anticipated and not necessarily reflective of broader market trends, basing their assessment on price-action analysis.

Bitcoin, although avoiding a significant sell-off, failed to replicate the upward momentum observed in previous days. From a technical standpoint, Ethereum's pullback to $2700 represents a correction following this month's rally, which shouldn't cause undue concern. However, a breach below these levels could raise alarms for these assets.

While some anticipate the onset of the alt season, others approach the market with caution. Markus Thielen, head of 10x Research, highlighted Bitcoin's continued dominance, maintaining a 51% market share in a recent report. Thielen suggested that dominance would need to drop below 45% for the altcoin season to commence.

Bitcoin dominance indicates the ratio between its market capitalization and that of all other cryptocurrencies combined. Historically, declining dominance signals a shift of capital towards alternative tokens, a trend favorable to altcoin investors.