Crypto Market Update

Crypto markets climbed higher on Monday, with Bitcoin (BTC) trading above $84,000, benefiting from another positive day in U.S. stocks that extended their rise, lifting risk assets.

The largest cryptocurrency was up, and the broader crypto market rose by 1.8%, while the CoinDesk 20 Index slightly outperformed with a 2.4% advance during the same period. Ethereum’s Ether (ETH) stabilized above $1,900 and saw a 2.8% increase. Several major altcoins, including SUI, AAVE, ICP, and NEAR, recorded more than 5% gains.

Solana increased by 3% in line with the broader market, despite the first day of SOL futures trading on the institutional-focused CME marketplace failing to impact investor sentiment.

Ethena’s governance token (ENA) surged by 7% amid news of developing a proprietary blockchain with tokenized asset issuer Securitize, aiming to bridge decentralized finance (DeFi) and traditional institutions.

The key U.S. stock indexes continued their upward momentum into this week, providing a favorable environment for risk assets. However, LMAX Group strategist Joel Kruger cautioned that the monthly S&P 500 chart indicates a potential correction for U.S. equities, which may affect cryptocurrencies.

Kruger noted concerns regarding global trade tensions and a slowing U.S. economy, questioning how much more accommodation the Fed can provide. He mentioned the possibility of BTC revisiting the 2024 March peak at $73,000-$74,000.

Market expectations lean toward the Fed maintaining unchanged rates during this week’s Federal Open Market Committee meeting. Investors should monitor any potential adjustments to the central bank’s balance sheet runoff or quantitative tightening (QT) program, according to David Duong, head of research at Coinbase Institutional.

Duong speculated that the Fed might pause or terminate its QT program this week, given that bank reserve levels are approaching the 10-11% of GDP benchmark deemed sufficient for financial stability. He noted that the recent crypto selloff was primarily due to macroeconomic concerns and declining liquidity conditions, though things might improve in the next quarter, potentially supporting asset prices. He concluded that crypto prices could reach a bottom in the coming weeks before rebounding to new highs later this year.