Bitcoin, the leading cryptocurrency, surged to an intraday high of $56,277 earlier this Thursday, according to Bitstamp data.  

The cryptocurrency has recovered in tandem with global stock markets. Japan's flagship Nikkei index 225 jumped sharply higher earlier today after recording its biggest price drop since the last 90s on Monday.  

After plunging to as low as $49,557, Bitcoin has now surged by more than 13%, paring a substantial portion of its losses. 

According to the widely used Fear & Greed Index, the leading cryptocurrency has now plunged back into extreme fear territory following its massive price plunge. On Monday, the index logged just 17 points out of 100. This is its lowest reading since November 2022.  

Buying the dip 

"We had net inflows into both our Bitcoin and Ethereum ETFs today. ETF investors buying the dip," Bitwise CIO Matt Hougan said in a social media post. This likely explains why the market saw such a relatively swift recovery. 

Sean McNulty of Arbelos Markets noted that sentiment remains cautious even though investors are buying the dip. 

All eyes on the Fed

There is still a lot of macroeconomic uncertainty, with the odds of an emergency rate cut now seeing a significant decline.

While a 25 basis-point rate cut now appears to be almost certain in September, Fed watchers are now debating whether or not a 50 basis-point cut could be on the table. This will likely depend on the upcoming labor market data that could prompt the Fed to act faster.