Bitcoin rose on Wednesday morning in Asia to near US$26,000, after sinking below the key support level of US$25,000 on Tuesday for the first time in three months. Ether also bounced back to near US$1,600 as all other top 10 non-stablecoin cryptocurrencies logged gains with Toncoin leading the winners with a 24-hour surge of over 12%. The rally followed the recent panic sell-off over an incoming liquidation from collapsed crypto exchange FTX, which is expected to unload its US$3.4 billion crypto holdings by the end of the year. U.S. stock futures traded flat after Wall Street closed lower on Tuesday amid oil price concerns.

Bitcoin nears US$26,000; Overreactions towards FTX liquidation plan?

Bitcoin rose 3.02% in the last 24 hours to US$25,867.44 as of 07:30 a.m. in Hong Kong, adding 0.36% for the week, according to CoinMarketCap data. The world’s largest cryptocurrency briefly touched an almost three-month-low of US$24,930.30 and bounced back to a high of US$26,451.94 on Tuesday.

Ether saw a similar rebound, rising 3.10% to US$1,595.00 but lost 2.28% in the past seven days. The second top crypto reached a 24-hour high of US$1,619.11 on Tuesday.

The current crypto market sentiment echoes “the late-stage bear market from 2015 and 2019,” as “a sustained period of poor momentum has pushed the fear and greed index to a nine-month low,” crypto research firm K33 wrote in a report Tuesday.

“The worsening sentiment originates from anticipated sell-side pressure related to FTX balances of US$560 million BTC, US$192 million ETH, and US$1.16 billion SOL,” wrote K33. “The market also expects further sellside pressure from Mt. Gox’s trustees and U.S. Silk Road Bitcoins. The schedule and structure of these potential sell-side flows are unknown but have all been decisive forces in hammering an already pressured sentiment.”

FTX, which went into bankruptcy in November 2022, may receive court approval on Wednesday to sell its crypto holding that totals around US$3.4 billion. However, the recent sell-off ahead of the liquidation could be an overreaction, according to Greg Moritz, co-founder and chief operating officer of crypto hedge fund Alt Tab Capital.

“FTX, having an interest in acquiring the highest price for its assets, will likely go about the liquidation in an orderly and rational way that minimizes the effect on market pricing,” said Moritiz in an emailed comment. 

“Overall, the actual impact of the potential FTX liquidation on the crypto market is likely to be quite small and take place over months, however, we already have downward pressure on many coins as a result of the proposal,” Moritz added. “This is primarily due to the retail crypto market not fully understanding FTX’s proposal and reacting based on fear rather than logic.  When that happens, it tends to create attractive buying opportunities for savvy investors with a long-term focus.”

All other top 10 non-stablecoin cryptocurrencies posted gains in the past 24 hours. Toncoin led the winners, which rose 12.49% to US$1.84 and gained 3.73% for the week.

Toncoin is the native token of the Open Network (TON), a blockchain-based, decentralized network originally developed by messaging app Telegram, whose price has jumped over 30% in the past month. TON is set to have a presentation with Telegram at the ongoing Token2049 event in Singapore on Wednesday, with the theme: “Transforming Telegram to Web3 with Toncoin.”

The total crypto market capitalization gained 2.54% in the past 24 hours to US$1.03 trillion, as trading volume rose 9.22% to US$35.33 billion.

U.S. stock futures flat before CPI release

U.S. stock futures were trading flat as of 09:00 a.m. in Hong Kong. Both Dow futures and S&P 500 futures inched 0.01% lower, while Nasdaq futures edged up 0.05%. All three major U.S. indexes booked losses during trading hours on Tuesday, with Nasdaq leading with a 1.04% drop.

The main stock indexes in Asia were mixed as of 09:30 a.m. in Hong Kong. China’s Shanghai Composite and Hong Kong’s Hang Seng moved up, while South Korea’s Kospi and Japan’s Nikkei 225 logged losses.

The U.S.-based computer technology firm Oracle Corp. spearheaded the Wall Street decline on Tuesday, whose stock price closed the day 13.50% lower. The company on Monday reported its first-quarter revenue of the fiscal year 2024 and projection for second-quarter earnings, which were both below the expectations as the demand for cloud computing slows down.

Following Oracle, cloud-heavy technology firms Microsoft and Amazon also booked losses on Tuesday, falling 1.83% and 1.31% respectively.

On the inflation front, the U.S. consumer price index (CPI) for August will be released on Wednesday, with analysts expecting an acceleration in annual inflation rate. 

An annual growth in core CPI of over 4.5% can indicate a sticker-than-expected inflation, Tony Sycamore, a market analyst at investment advisor IG Australia Pty, told Bloomberg on Wednesday, which could make the S&P 500 “board the express train back to the August low 4,350/30 area.”

Meanwhile, rising oil prices are adding to the inflation concerns, with the benchmark Brent Crude closing 1.6% higher at US$92.06 on Tuesday, the highest level since November 2022.

“People are a little bit worried about energy prices picking up pretty aggressively in recent weeks and that creates some concerns as we look forward to November”, which could make the Federal Reserve raise interest rates again, Thomas Hayes, chairman at equity firm Great Hill Capital LLC., said, according to a Wednesday Reuters report.

The CME FedWatch Tool predicts a 93% chance the central bank will maintain the current rate unchanged in September, which is currently in the range between 5.25% and 5.50%. It gives a 56.8% chance for another pause in November, down from 57.6% on Tuesday.

(Updates with equity section.)

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