On Monday, cryptocurrency markets experienced a notable uptick, with bitcoin (BTC) surpassing $84,000, marking another successful day for U.S. stocks that contributed to the rise of risk assets. The leading cryptocurrency rose, and the overall crypto market advanced by 1.8%, while the CoinDesk 20 Index edged slightly higher with a 2.4% increase during the same timeframe. Ethereum’s ether (ETH) maintained its position above $1,900, gaining 2.8%, while several major altcoins, including SUI, AAVE, ICP, and NEAR, recorded gains exceeding 5%.
Solana similarly rose by 3%, aligning with the general market trend, as the launch of SOL futures on the CME aimed at institutional investors did not alter the sentiment among traders.
The governance token ENA from Ethena surged by 7% following news of a collaboration to develop a proprietary blockchain together with asset issuer Securitize, which intends to bridge decentralized finance (DeFi) with traditional financial institutions.
The rebound of key U.S. stock indexes into this week provided a supportive environment for risk assets. However, LMAX Group strategist Joel Kruger cautioned that the monthly S&P 500 chart indicates a potential sustained correction in U.S. equities, which might impact cryptocurrencies negatively.
“Given the current global trade tensions and worries about a slowdown in the U.S. economy, all amidst uncertainty regarding the Fed’s ability to provide further support, there are indeed concerns that stocks may decline further,” Kruger remarked.
He pointed out the possibility of bitcoin retracing to revisit the March 2024 peak between $73,000 and $74,000.
The market largely anticipates that the Federal Reserve will keep interest rates steady in this week’s Federal Open Market Committee meeting, though investors should monitor any changes related to the central bank’s balance sheet runoff or quantitative tightening (QT) initiatives, according to David Duong, head of research at Coinbase Institutional.
“We believe the Fed might pause or conclude its QT program this week, as bank reserves are nearing the 10-11% of GDP range, commonly viewed as a threshold for ensuring financial stability,” he stated in a recent update.
Duong highlighted that the recent decline in crypto markets was primarily driven by macroeconomic concerns and worsening liquidity conditions, which might improve in the upcoming quarter, potentially aiding asset prices. “Crypto values could hit their lowest point within the next few weeks, setting the stage for a rebound to new highs later this year,” he concluded.