Bitcoin and Ethereum rallied sharply at press time on Monday evening as the global cryptocurrency market cap spiked 7.5% to $1.3 trillion.
|Cryptocurrency||24-Hour % Change (+/-)||Price|
|Axie Infinity (DCR)||+47%||$26.92|
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Why It Matters: The apex coin traded over $31,000, while Ethereum, the second-largest coin by market cap, traded just below the psychologically important $2,000 level at press time. During intraday trading, BTC and ETH touched $31,949.63 and $2,005.49, respectively.
The gains seen in stocks last week appear to be permeating to cryptocurrencies. At press time, the S&P and Nasdaq futures traded 0.1% and 0.4% higher, respectively.
Risk assets like stocks could get a boost this week as China begins reopening the country due to a drop in COVID-19 cases. Both Beijing and Shanghai are easing restrictions, reported Voice of America.
Cryptocurrency trader Justin Bennett noted that Bitcoin and the S&P 500 have been positively correlated for some time now. He tweeted that while the S&P had an impressive rally last week, Bitcoin was “still sleeping.”
“Looks like [Bitcoin] is about to play catch-up. This would put it in the mid $30k range at current S&P levels.”
$BTC has been positively correlated with the S&P 500 for some time now.— Justin Bennett (@JustinBennettFX) May 30, 2022
The S&P had an impressive rally last week while #Bitcoin was still sleeping.
Looks like #BTC is about to play catch-up. This would put it in the mid $30k range at current S&P levels. $SPY $SPX pic.twitter.com/3TrZdNVZsm
Investor sentiment, as measured by Alternative.me’s “Crypto Fear & Greed Index,” still remains weak. The index flashed “Extreme Fear” at press time and had a value of 16. However, it has improved over last week when it stood at 12.
The "Crypto Fear & Greed Index" By Alternative.me
Old hands have reduced their Bitcoin spending behavior, said chartist Ali Martinez, citing an on-chain metric known as entity-adjusted dormancy flow.
The entity-adjusted dormancy flow is a variation of dormancy, which is a marker of a coin’s lifespan. Analysts use these measures to call out market bottoms and explore long-term market trends.
“A dormancy value of 250K or lower, suggests [Bitcoin] is in a good historical buy zone,” tweeted the chartist.
Martinez said that Bitcoin dormancy value is hovering below 250,000 for the past 6 months and this is a “buy the dip” hint.
Entity-Adjusted Dormancy Flow shows that old hands have reduced their $BTC spending behavior. A dormancy value of 250K or lower, suggests #BTC is in a good historical buy zone.#Bitcoin dormancy value has been hovering below 250K for the past 6 months, hinting "buy the dip." pic.twitter.com/xXGRY5vcEo— Ali Martinez (@ali_charts) May 30, 2022
Meanwhile, Bitcoin on-chain activity, which plateaued in September has yet to pick up pace. Glassnode said in a recent note that the Hodler class are the only ones that remain.
The on-chain analysis firm noted that after the Terra (LUNA) meltdown entities holding less than 100 BTC soaked up coin volume sold in distress by the Luna Foundation Guard.
“Alongside a majority of long-term holders, an increasingly large volume of BTC appears HODLed and acquired at these lower prices. This trend, unless disrupted, can be expected to propel Long-Term Holder supply above its ATH over the coming months,” said Glassnode, in a note seen by Benzinga.
Meanwhile, over the long Memorial Day weekend, the beleaguered Terra project attempted a resurrection as it launched a new blockchain and airdropped LUNA 2.0 tokens to holders.
Terra now represents the 2.0 version of the token and is up 60.6% at $9.32, while Terra Classic (LUNC) traded 16.5% higher at 0.000123 at press time.
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