• Bitcoin fell to $50,700 on February 21st, and Ethereum fell below $2,890, before reversing on the 22nd.
• Citing price action analysis, some traders said the sell-off was expected and not indicative of broader market trends.

Earlier this week, the crypto asset (virtual currency) market hit multi-month highs, dipped slightly, and then recovered on the 22nd. The move came as traders booked profits and market observers focused on chipmaker Nvidia’s earnings report as the catalyst for the move.

Bitcoin (BTC) fell to $50,700 late Wednesday, while Ethereum (ETH) made some reversal after falling to just under $2,890. Polygon (MATIC) fell 7%, leading the losses among major crypto assets, while Cardano (ADA) and XRP (XRP) fell as much as 5%. Meanwhile, the CoinDesk 20 Index (CD20), a major crypto asset benchmark, fell 1.2%.

Markets were depressed ahead of Nvidia’s fourth-quarter earnings report, but the report beat expectations and spurred a rally in artificial intelligence (AI) tokens. AI tokens soared last week after OpenAI announced the video generation Sora. The market capitalization of AI tokens exceeded $15 billion (approximately 2.25 trillion yen, equivalent to 1 dollar = 150 yen), and World Coin’s WLD reached an all-time high.

This haphazard price movement forced the liquidation of more than $200 million (approximately 30 billion yen) in crypto asset futures, of which $150 million (approximately 22.5 billion yen) was long, meaning that it was held on the back of rising prices. It was a bed. Later, as the market recovered following Nvidia’s earnings report, shorts (bets on a decline) were affected.

As such, some traders, citing price action analysis, said the sell-off was expected and not indicative of a broader trend in the market.

“Bitcoin did not repeat the upward momentum observed in the past few days, but the sell-off remains strong,” Alex Kuptsikevich, market analyst at FxPro, said in an email to CoinDesk. We succeeded in avoiding it.” “Technically, Ethereum’s pullback to $2,700 is a correction to this month’s rally and is not too alarming. However, a break below this level could be a cause for concern for these assets.”

While some market players are predicting the beginning of altcoin season, others remain cautious.

Markus Thielen, founder of 10X Research, noted in a report earlier this week that Bitcoin continues to dominate with a 51% market share. Thielen said Bitcoin’s dominance “needs to drop below 45%” for altcoins to flourish.

Bitcoin dominance represents the ratio of Bitcoin’s market capitalization to the market capitalization of all other crypto assets. Historically, a decline in dominance signals a shift of capital to other tokens, which is good for altcoin investors.

｜Translation: CoinDesk JAPAN
｜Edited by: Toshihiko Inoue
｜Image: Shutterstock
｜Original text: Bitcoin Back Over $51K, Crypto Market Recovers as Nvidia’s Earnings Rejuvenates AI-Tokens