Bitcoin and major altcoins saw a relief bounce Wednesday after Tuesday’s market bloodbath wiped out over $1.2 billion in bullish bets. XRP and BNB Chain’s BNB led the rebound, gaining 3% and 5%, respectively, while Bitcoin climbed to $89,000 after dipping to $86,200. The recovery aligned with a CoinDesk analysis suggesting that assets were oversold and due for short-term relief.

Solana’s SOL added 5%, while Dogecoin (DOGE) and Cardano’s ADA showed modest 1.2% gains. However, Tron’s TRX remained under pressure, falling 5% in the last 24 hours. Meanwhile, the broader CoinDesk 20 index was still down 2%, indicating mixed sentiment.

Gold, which dropped 1.3% Tuesday following a profit-taking event after hitting record highs, rebounded slightly during Asian morning trading hours Wednesday.

The recent volatility in crypto markets was partly attributed to money outflows from Bitcoin ETFs, with over $1 billion pulled in the last two weeks. Additionally, the strengthening Japanese yen, often considered a safe-haven currency, contributed to the decline by drawing investments away from riskier assets like Bitcoin.

On the macroeconomic front, hopes for U.S. Federal Reserve rate cuts have risen. Market expectations for a rate cut in May have climbed to 30%, while the likelihood of two cuts by June has tripled to 15%. This sentiment shift follows a sharp decline in U.S. consumer confidence, which dropped to its lowest level since August 2021.

Despite the recovery, traders remain cautious, as altcoin rallies appear weak, with fresh capital inflows primarily benefiting Bitcoin. BTC dominance continues to rise, while altcoin prices remain subdued, suggesting that most altcoin bulls are already fully invested.

Market analysts note that BTC demand has recently been driven by institutional players like MicroStrategy, which funds its purchases through equity-linked note issuances. However, with crypto-related financing accounting for nearly 19% of total issuance over the past 14 months, some analysts warn that this funding model may be nearing saturation. A slowdown in institutional demand could put further pressure on BTC prices.

As the market continues to digest the recent sell-off, Bitcoin’s next move remains uncertain. Traders will closely watch institutional buying activity and broader macroeconomic trends to gauge whether this recovery has real momentum or is just a temporary bounce.