Nasdaq rebounds 1%, can the crypto market catch a breath? A weak rebound under the shadow of the tariff war

After two days of sharp declines, the US stock market finally shows signs of a rebound. The Nasdaq 100 index has increased by 1%, which could be a turning point for the crypto market that just experienced a liquidation wave. However, whether this rebound can sustain depends on the progress of macroeconomic developments.

From Crash to Rally, What Are US Stocks Doing?

According to the latest news, what is the background of this rebound? A review of the past two days’ market movements makes it clear.

On January 19-20, US stocks experienced a significant sell-off:

• S&P 500 index fell by 2.05%, erasing all gains since the beginning of the year
• Nasdaq 100 index dropped by 2.08%
• The VIX volatility index surged above 20, reaching the highest level since November last year

What was the main culprit behind this decline? Concerns over China-EU trade tensions and a sell-off of Japanese government bonds pushed up US Treasury yields, triggering a global “safe haven” sentiment. Several EU countries are considering tariffs on imports from the US worth 93 billion euros, fueling market panic over trade conflicts.

Now, the Nasdaq rebounded by 1%, indicating that market sentiment is recovering. But how far this recovery can go depends on the progress of tariff negotiations.

Has the “Life-saving Straw” for the Crypto Market Arrived?

This US stock rebound is especially important for the cryptocurrency market. Why? Because of the high correlation.

According to the latest data, the correlation between Bitcoin and the Nasdaq 100 index has risen to 46%. In other words, when US stocks sneeze, the crypto world catches a cold. This was fully reflected during the crash on January 19:

• Bitcoin fell below $92,000, with a nearly 3% intraday decline
• Ethereum dropped by 3.5%
• Nearly 240,000 traders were liquidated, with total liquidation amounting to $680 million

Now that US stocks are rebounding, the crypto market may ease selling pressure. But there’s a problem: this rebound is not strong enough. A 1% increase, compared to a 2.08% decline, is only a partial recovery and far from pre-crisis levels.

Hidden Concerns Behind the Rebound

While this rebound is good news, we must remain cautious. Several key factors still constrain the market:

Macroeconomic Uncertainty Remains The outcome of the tariff war is still unclear. Trump’s threats of tariffs on Greenland, EU retaliations—these are still in negotiation stages. Any new negative news could cause the market to fall again.

The Fed’s Stance Remains Hawkish US Treasury yields remain high, and the rate hike cycle is temporarily paused, indicating dollar liquidity tightening. For high-risk assets like Bitcoin, holding costs are still relatively high.

Institutional Funds Are Still Outflowing Recent large-scale net outflows from US spot Bitcoin ETFs suggest that institutional investors have not fully regained confidence. Whether this rebound can attract funds back depends on subsequent developments.

Safe-Haven Assets Still Attractive Gold and silver both hit new all-time highs, with spot gold surpassing $4,690 per ounce and spot silver over $94 per ounce. This indicates that market risk aversion remains strong, with funds flowing into safe assets rather than re-entering risk assets.

Key Watchpoints

Over the next week, several signals are worth monitoring:

• Can the Nasdaq rebound break through previous highs and establish an upward trend?
• Will the VIX volatility index continue to decline, indicating genuine easing of market panic?
• Are there any new developments or shocks in US-EU tariff negotiations?
• Can Bitcoin hold above $90,000, and is there potential for a rebound to $93,000?

Summary

The Nasdaq 100 index’s increase to 1% represents a technical rebound after a crash and provides a breathing space for the crypto market. However, the sustainability of this rebound remains uncertain. Uncertainties in the tariff war, the Fed’s hawkish stance, and ongoing institutional outflows all limit the market’s upward potential. For crypto investors, it’s important not to be overly optimistic but to focus on whether the rebound can form a true bottom and how macro developments unfold. In the short term, a 1% rally may bring some technical correction, but reversing the overall downtrend requires stronger fundamental support.