Most cryptocurrencies traded slightly higher on Wednesday as bearish sentiment faded.

Bitcoin (BTC) held above $43,000 on Wednesday, which means the January sell-off is starting to stabilize. Meanwhile, some alternative cryptocurrencies (altcoins), such as AVAX, MANA and GRT, rose as much as 7% over the past 24 hours.

Tensions between Russia and Ukraine continue to linger, which could keep some traders on the sidelines. On Wednesday, North Atlantic Treaty Organization (NATO) officials stated that diplomacy could continue, but so far there are no signs of de-escalation on the ground.

On the macro front, minutes from the January U.S. Federal Reserve meeting showed that officials are monitoring the higher-than-expected inflation that could trigger rate hikes. Still, the potential for higher rates is already reflected in market prices, especially after a three-day losing streak in speculative assets including stocks and cryptocurrencies.

Despite the recent price bounce, some analysts remain cautious, especially as market indicators show neutral sentiment among traders.

"In the event BTC gets under $41,575, this postpones the rally, allowing for pullbacks to $38,734, or $37,711," Mark Newton, technical strategist at FundStrat, wrote in a Wednesday email.

If current price levels hold, Newton expects buying to continue toward $51,000 BTC, which is a 50% retracement of the downtrend since November.

The chart below shows the ratio of BTC buy versus sell volume in perpetual swap trades (smoothed using a 14-day moving average in yellow). A perpetual swap is a type of crypto derivative trading product, similar to traditional futures.

The ratio is currently positive, which indicates bullish sentiment. Over the past two weeks, however, buy volume has decreased relative to sell volume, suggesting low conviction among bullish traders.

Bitcoin traders remain hesitant ahead of a potential rate hike by the U.S. Federal Reserve in March, according to Marcus Sotiriou, an analyst at the U.K.-based digital asset broker GlobalBlock. "Data shows that this recent rally was driven mostly by futures, while spot has been selling," Sotiriou wrote in an email to CoinDesk.

"We know this because the aggregated cumulative volume data (CVD) for spot BTC has been stagnant while the CVD for futures has increased. This suggests that this price rise was driven by speculation or hedging rather than genuine demand."

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Digital assets in the CoinDesk 20 ended the day higher.

Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive, and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.