Bitcoin and Ethereum surge as new investment pours into cryptocurrency.

This week, Bitcoin and Ethereum experienced a significant comeback as fresh investments flowed back into cryptocurrency markets after the tariff shock between the US and China.

Bitcoin broke the $110,000 mark for the first time since early October, currently hovering around $111,000, as per CryptoSlate data. This represents a 4% increase within the day, reversing some losses incurred after President Donald Trump announced new tariffs on imports from China.

Ethereum also surpassed the $4,000 threshold, increasing over 4% to approximately $4,045, a price point traders consider noteworthy.

Interestingly, other major cryptocurrencies joined the upswing with their own rallies.

As detailed in CryptoSlate data, assets like BNB, XRP, Solana, Dogecoin, Tron, and Cardano each saw gains ranging from 5% to 8%, illustrating a widespread market recovery rather than just a Bitcoin-driven surge.

‘Buy the dip’

The recent rise can be attributed to the prevailing “buy the dip” mentality throughout the market.

Importantly, on-chain metrics from blockchain analytics firm Lookonchain indicate that over $6 billion in new Tether’s USDT and Circle’s USDC stablecoins have been released into circulation since the previous week.

The issuance of stablecoins often precedes renewed buying activity in spot markets. In this case, capital seems to be moving from cash holdings into dollar-pegged tokens to facilitate asset accumulation.

Meanwhile, the sentiment reflects trends seen in traditional markets.

Data from The Kobeissi Letter, referencing Bank of America, shows US equity investors purchased $3.9 billion in stocks last week following three consecutive weeks of withdrawals.

Analysts noted that net inflows into single stocks reached $4.1 billion, marking the fifth-highest total since 2008 and the largest recorded for a week during which the S&P 500 declined by at least 1%.

They commented:

“This was fueled by institutional inflows of +$4.4 billion, the highest since November 2022. Retail investors contributed +$1.1 billion, marking their second weekly purchase out of the last six.”

Market remains cautious

Despite the upward trend, Bitwise’s Cryptoasset Sentiment Index still shows a broadly negative outlook, with readings indicative of a “high-risk, high-reward” scenario for Bitcoin.

Nonetheless, the asset manager’s intraday sentiment model is currently showing a bullish divergence, suggesting a possible short-term reversal.

Analysts from Galaxy Research also shared this cautiously optimistic perspective, noting that while last week’s flash crash “significantly impacted asset prices,” the overall situation “remains favorable.”

They remarked:

“Bitcoin is well positioned as the digital gold to benefit from fundamental skepticism regarding government fiscal and monetary policies. The rise of tokenization and stablecoins, along with a favorable U.S. regulatory environment, should support the growth prospects of other key digital assets like ETH and SOL.”