For US investors settling in for Thanksgiving turkey, the crypto market has served up a "disbelief rally."
Over the last 16 hours, the total crypto market capitalization reclaimed the $3tn mark, abruptly ending the early-week bleed despite a backdrop of negative headlines, according to TradingView composite data.
The $90k recovery
Bitcoin led the reversal, climbing 5.2% overnight to break the psychological $90,000 barrier at 18:07 UTC on 26 Nov. It wasn't a solo effort; Solana matched the pace with a 5.2% gain, reaffirming its high-beta correlation. Ethereum rose 3.7%, while BNB and XRP posted modest gains of 3.4% and 1.5% respectively.
The 'Teflon' trade: Why we are up
The catalyst wasn't what happened, but rather what didn't happen. On Wednesday, the market absorbed two significant blows: a "weak" credit rating for Tether (USDT) from S&P and the stablecoin's delisting from major Korean exchange Bithumb.
Historically, this combination would trigger a flush. Instead, prices held firm. This "failed breakdown" trapped bearish speculators who had positioned for a crash, likely triggering a short squeeze. The chart confirms this with a vertical move starting around 18:00 UTC, pushing Bitcoin well above its 7-day Rolling Volume Weighted Average Price (RVWAP) of around $86,456.
The Tether paradox
The market’s indifference to S&P’s "weak" rating is telling. Traders effectively treated the downgrade as a lagging indicator, a "paperwork" dispute rather than a solvency crisis.
The proof lies in the altcoins. Assets like Solana are effectively leveraged bets on Tether's liquidity; if the market genuinely feared a USDT depeg, these assets would face an existential liquidity shock and bleed first. Instead, Solana rallied in lockstep with Bitcoin. By ignoring the rating, the market has signaled it believes the "systemic risk" is overstated by traditional gatekeepers.
The liquidity engine: Why Tether matters
To understand the significance of this shrug, you have to understand the plumbing. Tether is not just a token; it is the primary vehicle for crypto market liquidity.
- The 80% Rule: Roughly 80% of all trades on centralized exchanges involve stablecoins, and Tether dominates 70% of that market.
- The Feedback Loop: S&P’s report noted that Bitcoin now makes up 5.6% of Tether’s own reserves. This creates a "reflexive" risk: if Bitcoin falls, Tether’s backing weakens; if Tether weakens, Bitcoin liquidity evaporates.
Fear lingers
Despite the green candles, sentiment remains deeply cautious. The Fear and Greed Index sits at 18/100 (Extreme Fear) as of 09:30 UTC Thursday. While up from Sunday’s low of 10, the disconnect between rising prices and "extreme fear" suggests this is a wall-of-worry rally, driven by forced buying rather than euphoria.
Flows turn positive
Institutional demand provided the floor for the squeeze. US Bitcoin ETFs saw $21.1mn in net inflows on Wednesday, according to Farside Investors data, the first consecutive daily inflow in over two weeks.
The real surprise, however, was Ether (ETH), which clocked $60.8mn in net inflows, extending its streak to four days. While the headlines focus on Bitcoin's price action, institutions appear to be quietly accumulating the smart contract layer.
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