Crypto markets bounced back on Tuesday after several sessions of heavy losses, and privacy-focused Zcash led the recovery. The privacy coin climbed 8.5% over 24 hours to $1,215.85, making it the best performer among the largest tokens and lifting its market capitalization to $20.57 billion.

Bitcoin gained 1.57% to $83,195, while Ethereum rose 2.90% to $2,463.35. Nearly every major crypto asset outside the stablecoin category finished the day higher.

The broader market followed suit. Total crypto market capitalization climbed 1.68% to $2.78 trillion, and the CMC20 index, which tracks the 20 largest cryptocurrencies, added 1.45% to $169.87 per unit — a sign that smaller-cap coins played an outsized role in the day's surge. The rebound was largely expected after days of steep declines, particularly among the coins with the largest market capitalizations and highest trading volumes.

The crypto bounce tracked a recovery in technology equities. Chip and artificial intelligence stocks rebounded on Monday from last week'selloff, with the Nasdaq Composite gaining roughly 1.1%, and digital assets have often moved in step with technology shares. Bitcoin also attracted buyers in the $80,000 to $81,000 range.

Money from traditional investors provided additional support. Bitcoin and other crypto exchange-traded funds, which allow investors to hold the assets through a regular brokerage account, recorded net inflows of $526.7 million — the biggest daily total in a month.

Treasury yields remain the rebound's main pressure point, with the 10-year note trading above 5%. A yield is the annual return investors demand for lending to the U.S. government; when it climbs, safe bonds compete with riskier assets such as crypto and stocks for the same capital.

The macroeconomic backdrop is still tense. Brent crude oil is trading near $110 a barrel, and expensive oil feeds inflation by raising the cost of fuel, shipping and goods. Higher inflation raises the odds that the Federal Reserve keeps rates elevated — or raises them again — which pushes bond yields up. Higher yields, in turn, pull money out of risk assets, meaning crypto tends to fall when oil spikes and rise when it cools.

Zcash outran the field for several reasons. The token had dropped about 25% over the past month, so part of the bounce reflects an oversold market in which traders who had borrowed to bet on higher prices had already been forced out through liquidations. Liquidations occur when an exchange automatically closes a borrowed-money position after losses reach a set limit, adding selling pressure. With that selling spent, the price had room to snap back.

Zcash also has its own set of potential catalysts. Developers are due to decide on the NU7 network upgrade today, and traders often buy ahead of such events. Network upgrades are coordinated changes to a blockchain's rules that node operators must adopt in updated software; per the Zcash Foundation's release, NU7 has already arrived on testnet, the staging network where changes are trialed before reaching the main chain.

Privacy coins have also been strong lately. These networks obscure details that transparent ledgers like Bitcoin's leave open — sender, recipient and amount — with Zcash making such shielding optional and Monero building it in by default. Competing privacy coin Monero is up 15.29% over seven days to $609.87.

Zcash is a high-beta asset, meaning it moves harder than the market in both directions. It rose 8.5% on the day versus Bitcoin's 1.57% gain, but it is up only 1.17% over the past seven days, so Tuesday's jump has not yet erased the month's decline.

Market sentiment is broadly neutral. The Fear & Greed Index, a 0-to-100 gauge of market mood in which lower readings indicate fear and higher readings indicate greed, sits at 51. The CoinMarketCap Altcoin Season Index stands at 60; a reading of 75 or higher signals altcoin season, while 25 or below signals Bitcoin season, leaving neither camp in control.

The next test is policy. The Federal Reserve meets on October 27 and 28, and traders will watch whether it signals further rate hikes.

Disclaimer: The views and opinions expressed are for informational purposes only and do not constitute financial, investment, or other advice.

Source: Decrypt