A crypto rally is underway, with Bitcoin price rising above $114,000 for the first time since Friday. Other altcoins have also bounced back, with Mantle (MNT), Dash (DASH), Bittensor (TAO), PancakeSwap (CAKE), and Morpho being the top gainers.
The crypto market is recovering after the $20 billion liquidation on Friday as optimism of a trade deal between the US and China rose. In a TruthSocial post, Donald Trump hinted that he would reach a deal with China. He said this two days after he warned that he would impose 130% tariff on Chinese goods.
Therefore, a potential deal or compromise between the two countries will be bullish for the stock and the crypto market.
Cryptocurrencies are also bouncing back after most of them formed highly bullish patterns. Cardano price formed a giant hammer, while some, like Ethereum, have formed a morning star candlestick pattern.
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The crypto market is also rebounding as investors buy the dip after 1.6 million of them were liquidated. In most cases, cryptocurrencies tend to rebound after most of them go through a big drop.
The main reason for buying the dip is the perception that they have become bargains. Another reason is the thinking that the crash was a mere shakeout that will lead to a strong rebound. A shakeout is a forced flush of weak hands from the market. Its goal is to clear speculators and leave the genuine bulls.
Still, as we wrote here, the ongoing crypto market rally could be part of a dead-cat bounce (DCB). A DCB is a short-lived rally that happens after an asset crashes. It is often driven by short-covering and bargain hunters who expect it to keep going up. This bounce is often followed by a renewed selling of an asset.
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