Bitcoin, Ethereum, Dogecoin Spike Alongside Stronger Stocks: Time For Crypto To Finally 'Play Catch-Up?'

Bitcoin and Ethereum rallied sharply at press time on Monday evening as the global cryptocurrency market cap spiked 7.5% to $1.3 trillion.

See Also: Best Crypto Debit Cards

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.”

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. 

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.

Read Next: Massive Losses? Not For These Funds Which Made Millions On Their Terra (LUNA) Investment