Bitcoin surges over 6% in a single day, returning to $93,000—why is the market still in a state of "fear"?

On December 3, Bitcoin experienced a significant rebound, with a single-day gain of over 6%, and the price briefly surpassed $93,000.

In sharp contrast to Bitcoin’s rebound, shares of American Bitcoin Corp., a U.S. Bitcoin mining company, plunged over 50% amid extreme volatility, with trading even being halted multiple times as a result.

01 Market Dynamics

After weeks of sell-offs, Bitcoin saw a strong rebound on December 3. According to Gate market data, Bitcoin’s price reached as high as $93,923, posting a daily gain of 6.8%.

This rally was not an isolated phenomenon. Ethereum performed even more strongly, rising over 8% and briefly pushing back above the $3,000 mark. Smaller, lower-liquidity tokens like Cardano, Solana, and Chainlink saw gains of more than 10%.

In traditional financial markets, the three major U.S. stock indexes all closed higher. The Dow Jones rose by 185.13 points, or 0.39%; the Nasdaq increased by 0.59%; and the S&P 500 rose by 0.25%.

02 Behind the Data

The total crypto market capitalization increased by 6.6% over the past 24 hours, reaching $3.09 trillion. Bitcoin’s market cap rose by 6.7% to $1.81 trillion.

Despite the rebound, market sentiment indicators show that investors remain cautious. According to CoinMarketCap’s “Fear & Greed Index,” the market is still in the “fear” zone; the index has climbed from 23 yesterday to 28, just exiting the “extreme fear” range.

Stablecoin balances on exchanges are increasing, indicating that traders are temporarily parking capital in stablecoins rather than aggressively buying the dip in cryptocurrencies.

03 Causes of Volatility

Multiple market analysts have pointed out that this wave of volatility is mainly due to changes in market liquidity rather than a fundamental shift in the underlying factors. Rising expectations of Fed rate cuts are also considered one of the key drivers behind the market rebound.

Another crucial factor driving sharp short-term price swings is leverage. When Bitcoin’s price moves rapidly, leveraged positions—both long and short—can be liquidated, triggering forced closures and further amplifying price volatility.

Strategy Inc. (formerly MicroStrategy) has also impacted market sentiment. The company’s CEO stated that they may sell Bitcoin if necessary to repay debts.

04 Risk Focus

In sharp contrast to Bitcoin’s rebound, crypto assets associated with former U.S. President Trump’s family suffered heavy losses. American Bitcoin Corp., a crypto mining company co-founded by Eric Trump, saw its stock lose more than half its value in less than 30 minutes, plunging by as much as 51%.

The official TRUMP Memecoin is trading at about $6, far below its all-time high of $73.40 set after launch. First Lady Melania Trump’s Memecoin, MELANIA, is currently trading at just $0.13, having lost nearly all its value since its January peak this year.

05 Rational Navigation

For ordinary investors, it is crucial to understand Bitcoin’s cyclical volatility. Analysts believe that the current price swings are more like a typical “late-cycle correction” rather than the formation of a long-term top.

A report from analysts noted that investors are hedging by moving funds into stablecoins until ETF inflows stabilize and macroeconomic uncertainty subsides. They emphasized that this is different from the liquidity drain seen at long-term tops; currently, liquidity is accumulating off-exchange, indicating that the market is waiting for clearer signals.

Institutional investors are reassessing their risk exposure. Bank of America recently suggested that allocating 4% of a portfolio to Bitcoin may be reasonable for some investors. Meanwhile, Vanguard has begun allowing trading of ETFs and mutual funds that primarily hold cryptocurrencies on its platform.

Outlook

As of December 3, CoinMarketCap’s “Fear and Greed Index” had edged up to 28 but remained in the fear zone, where it has lingered for three weeks.

Stablecoin balances of USDT and USDC on exchanges continue to rise, with traders choosing to temporarily park funds rather than actively buy. Analysis from The Motley Fool, a leading crypto media outlet, noted that this structural market volatility is unrelated to real economic news and is more a reflection of leverage and liquidity changes.

With the U.S. Federal Open Market Committee (FOMC) policy meeting approaching, the market is holding its breath for the next monetary policy decision, which could provide key guidance for the next move in cryptocurrencies.