3 reasons Bitcoin recovered by 8% overnight — Key levels to watch next

Bitcoin rebounded by over 8% overnight and there are three key reasons behind the rally, in addition to macro factors.

The price of Bitcoin (BTC) recovered by more than 8% overnight on March 1 following a steep drop during the weekend.

There are three reasons the price of Bitcoin recovered swiftly in the past 24 hours. They include the recovering global stock market, rising Coinbase premium, and a typical weekend reversal.

BTC/USD 1-hour candle chart (Bitstamp). Source: Tradingview

Rising global stock market coincides with weekend reversal

The global stock market has started to recover as soon as the market opened on Monday, March 1.

The stock market slumped over the past week due to the rising Treasury yield curve. As the bond market rallied, risk-on assets, such as stocks, saw a pullback.

Holger Zschaepitz, said the global risk markets started the week strongly as bond yields eased. He said:

“Global risk mkts start the week on the front foot as bonds rally. Australia’s 10y yield fell 25bps, German 10y drops 3bps ahead of inflation data. US 10y steady at 1.41%. Following last week’s bloodbath, easing in bond yields is big relief. Gold gains to $1757. #Bitcoin at $46.8k.”

Although Bitcoin is considered a safe haven asset and a store of value, it often moves in tandem with the risk-on market.

This trend occurs because the market capitalization of Bitcoin is still hovering at around $1 trillion. Bitcoin’s valuation is relatively small compared to other safe-haven assets like gold. Hence, there is a higher probability that it would be more affected by macro factors, at least in the short term.

Analysts at Santiment explained:

“The relationship between the price of #Bitcoin and traditional stocks remains higher than the historical norm. As we’ve noted in previous data studies, $BTC’s rallies tend to be the most prominent when this correlation turns negative, as it did in December, 2020.”

Bitcoin price fluctuation with the S&P 500. Source: Santiment

The simultaneous recovery of the global stock market and cryptocurrencies followed a minor correction in the crypto market over the weekend.

Historically, when the price of Bitcoin falls hard during the weekend, BTC often sees a relief rally in the following week.

This likely occurs because there is generally lower volume during the weekend. Hence, the trend can change sharply when a new weekly candle emerges

Coinbase premium returns

In the past 12 hours, the Coinbase premium rebounded to around $100. Prior to the reversal, Coinbase was selling at a lower price than Binance, which meant there was strong selling pressure coming from the U.S.

As Cointelegraph reported, the futures funding rate resetting signaled that the market became less overheated. this coinciding with the Coinbase premium returning was a solid signal of improving appetite for Bitcoin, particularly in the U.S.

Coinbase premium. Source: CryptoQuant

When the price of Bitcoin trades lower on Coinbase, it is a sign of short-term bearishness because the U.S. dollar pair naturally trades higher than Tether.

In the foreseeable future, based on the recovering stock market trend and the consistently high Coinbase premium, the crypto market has a good chance of rebounding this week.

Whale clusters. Source: Whalemap

Whale clusters from Whalemap also show that $46,000 and $56,000 are the key support and resistance levels in the short term. 

Since Bitcoin rebounded strongly from $46,000, there is a high probability that it could rally to $56,000 in the next impulse wave.

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