US stocks rallied on Tuesday after President Donald Trump temporarily paused tariffs on Mexico and Canada, which gave Wall Street a break from escalating trade tensions and helped major indexes snap a two-day losing streak.
The S&P 500 saw a 0.72% increase, the Dow Jones Industrial Average surged by 0.3%, and the Nasdaq Composite rose by 1.35%. Investors got a short-term boost as the tariff news hit the wires.
Then corporate performance on Wall Street immediately soured the mood.
Alphabet’s fourth-quarter results missed expectations, while AMD’s data center sales also fell short of projections, so shares of both companies tanked in extended trading.
Tech stocks helped push the S&P 500 into the green despite weak earnings. Apple rose 2.1%, while Nvidia added 1.7%.
Alphabet fell 3.4% after missing analyst expectations. AMD also saw its stock drop by 4% as its data center business underperformed.
Banks had a mixed session. Bank of America rose 1.08%, and Wells Fargo gained 1.7%. JPMorgan lagged, slipping 0.23%. Payment giants Visa and Mastercard saw slight declines, while health tech saw a rebound. Eli Lilly’s stock rose nearly 2%.
Meanwhile, global financial markets kept a close watch on US trade policy. South Korea’s Kospi surged over 1%, while Japan’s Nikkei increased by 0.1%. China’s CSI 300 couldn’t catch a break, falling 0.6%.
Gold prices surged as geopolitical fears grew. Spot gold reached $2,854 an ounce, a record high after Trump imposed a fresh 10% tariff on Chinese imports.
Trump brought on more tensions by proposing that the US take over reconstruction efforts in Gaza. He made the announcement during a press conference with Israeli Prime Minister Benjamin Netanyahu.
While Wall Street found some footing, crypto markets crumbled.
Bitcoin dropped 1.23% to $98,160, and Ethereum fell 1.22% to $2,790.50, while Solana plunged by 3.67% to $204.78. Over $341 million in crypto liquidations were recorded in the last 24 hours, down nearly 29% in the past 24 hours.
Futures trading volume dropped by almost 30% to $248.2 billion, while open interest decreased by 2.65% to $114.28 billion.
Data shows over-leveraged traders being caught off guard by Wall Street’s weak earnings.
As liquidations got worse, prices spiraled down even more, forcing many traders to close positions. The Crypto Fear & Greed Index fell by 25% to 54, which is pretty bearish.
Bitcoin’s technical indicators offered little hope. A double top pattern near $98,400 confirmed bearish momentum, with prices struggling to hold key support levels between $97,200 and $97,800.
If liquidations continue, BTC could retest $96,500 in the short term. The On-Balance Volume (OBV) indicator shows weak buying interest.
The 2x Ether ETF, designed to double Ether’s daily performance using futures contracts, saw $246.5 million in net inflows on Tuesday. It was the fund’s biggest single-day haul since it launched. Just a day earlier, the ETF had crashed by 46% during a brutal market sell-off that hit Ether especially hard.
On Monday, Ether dropped 27% to $2,135, its sharpest one-day fall since May 2021. The collapse came as leveraged positions were wiped out, triggering over $600 million in liquidations across the perpetual futures market.
Traders wasted no time “buying the dip” after the crash. Nine spot Ether ETFs in the U.S. pulled in $308 million in net inflows on Tuesday, making it the third-largest intake since they launched.
Meanwhile, The DeFi tokens category saw an uptick on Wednesday while the biggest crypto, Bitcoin, remained under immense selling pressure.
High-rolling traders have quickly moved to profit-taking mode, dumping top DeFi tokens like Aave (AAVE), Chainlink (LINK), and Uniswap (UNI).
The global digital assets market recorded a marginal surge over the last day. The cumulative crypto market cap stood at $3.22 trillion. The total 24-hour trading volume took a hit of 29% to stand at $169 billion.
However, the Fear and Greed index flashed “Fear” sentiment among investors as Bitcoin failed to regain the $100,000 mark.
More whales have been noticed offloading DeFi tokens while this category of cryptos added more gains. One trader “0x257” moved ahead to deposit around $8 million worth of 4 assets to the crypto exchange, Binance. This whale had been a long-term holder of AAVE, LINK, and UNI tokens since mid-2022.
The whale dumped more than 13K of AAVE tokens (worth $3.5 million), bagging a 255% profit of $2.56 million. AAVE price jumped from the $253 zone to hit the $276 level. AAVE price surged by around 8% in the last 24 hours but failed to clear traces of its earlier collapse.
The token is down by 20% over the past 30 days. AAVE is trading at an average price of $271 as of press time.
Another multi-sig wallet “0xa92” swapped 10,090 Staked Ethereum (STETH) (worth $26.5 million) for 102,259 AAVE at an average price of $259.13. This wallet is now holding 230,192 AAVE (worth $62.2 million) with an unrealized profit of more than $18 million.
The whale wallet then deposited 161,463 Chainlink (worth $3.13 million), bagging a gain of $2.13 million. LINK price is still up by 60% in the last 90 days despite watching a decline of 15% in the last 7 days.
The crypto whale did the right thing by getting off the ship. LINK is trading at an average price of $19.53 as of press time. Its 24-hour trading volume dropped by 46% to stand at $895 million.
One big-money trader moved 85,529 UniSwap (worth $760K) to Binance, securing a gain of $258,000. UNI price jumped by over 3% in the last 24 hours despite dropping by 22% in the past 7 days. UNI is trading at an average price of $9.25 as of press time.
Amid this sell-off, BlockTower Capital also deposited $16.78 million in 4 DeFi tokens to Binance over the past 9 hours.
However, it took a net loss of around $3 million. It deposited 532,000 UniSwap tokens (worth $5.33 million), bagging a profit of $579,000.
It then dumped 197,000 LINK at a loss of $426,000, 3,862 MKR for a loss of $1.7 million, and $5.15 million at a $1.3 million loss.
The BlockTower still holds $21.7 million in assets in its wallets.
Finally, Inflows of stablecoins onto crypto markets are signaling a new potential recovery. This time, USDC is one of the most active tokens, with peak deposits to exchanges. The exchange flows, and increased minting on Solana happen as USDC catches up on its growth. In the past 30 days, USDC added more than 9.1M tokens, with over 6B tokens on Solana. At the same time, Tether (USDT) expanded by only 1.7B.
USDC flowed into exchanges immediately after both Bitcoin (BTC) and Ethereum (ETH) slid to a lower range. The stablecoin inflows coincided with signs of whales ‘buying the dip’ while holding liquidity on the sidelines. USDC achieved daily trading volumes above $17B in 24 hours, still behind USDT’s activity of over $130B.
The recent inflows also came from Tether (USDT), which is also widely in use. USDT inflows were similar to the market rally in November, though with a slower turnover of the outstanding supply. Both leading stablecoins are seen as a bullish indicator when there are signs of upcoming allocation to the markets.
Baseline inflows of both USDT and USDC were higher in the past few months, though especially notable after market dips. Stablecoins not only tracked BTC opportunities, but flowed into ETH and other prominent altcoins, though with a smaller allocation.
While BTC and ETH flowed out of exchanges, stablecoins were held in exchange wallets as a tool to react fast to market conditions.
The tokens are seen as less risky to store on exchanges, as both Circle and Tether have shown some ability to track and freeze funds in the case of exploits, a JULISHA.CO.KE Crypto Analyst Opines.