Morning Crypto Briefing: Bitcoin Eyes Two-Week Highs In Mid-$31,000s Amid Strong Start To Week

Key Points

• Cryptocurrencies are starting the week positively, building on a solid weekend, despite quiet trading conditions amid the US market holiday.
• Bitcoin was last trading in the mid-$30,000s, above its 21DMA and eyeing two-week highs.
• Cryptocurrency and macro traders are focused on a barrage of upcoming US data releases this week.

State Of The Market

Global risk appetite is amid what is set to be a quiet start to a busy week of macro risk events. US markets are shut on Monday for the Memorial Day public holiday, suggesting trading is likely to remain fairly uneventful. Nonetheless, major US equity index futures are trading in the green, with Nasdaq 100 futures up more than 1.0%.

Cryptocurrency markets have had a close correlation with US equities (particularly the US tech-dense Nasdaq 100) in recent months, and so this is helping cryptocurrency prices extend upside momentum after a broadly positive weekend.

The total market capitalization of cryptocurrencies rose back above $1.25 trillion on Monday, up about 3.8% on the day and extending its three-day run of gains to nearly 7.5%, pushing it above its 21-Day Moving Average for the first time since 5 May. Total market cap is more than 9.0% higher versus last week’s lows around $1.15 trillion.

US economic data will be a big focus this week and is likely to shape various narratives/debates about the US economy, such as whether demand for labor remains strong and whether economic growth momentum remains solid, despite the Q1 disappointment.

In terms of the chronological order of things, May Conference Board Consumer Confidence survey data is out on Tuesday, May ISM Manufacturing PMI survey data and April JOLTs Job Openings data is out on Wednesday, May ADP Private Employment Change data is out on Thursday, while the official May labor market report is out on Friday.

Cryptocurrencies will be sensitive to how the data impacts expectations for Fed policy in the coming quarters. In an ideal world for the crypto bulls, data will over the next few weeks/months show inflationary pressures in the US economy easing (meaning the Fed doesn’t have to tighten so aggressively) but growth remaining strong (meaning strong risk appetite). Various Fed policymakers will be speaking throughout the week and will also be worth monitoring.

Bitcoin Eyes Two-Week Highs In Mid-$31,000s

Bitcoin was last trading just above the $30,500 level and eyeing a test of two-week highs in the mid-$31,000s per token, having rallied 6.81% in the last three days and back above its 21-Day Moving Average around $29,650. That marks the first significant upside break of the 21DMA since mid-March and the bulls will be hoping may set the stage for some near-term upside.

However, despite a decent weekend and further upside on Monday, bitcoin still confirmed a record ninth successive negative weekly close on Sunday. The world’s largest cryptocurrency by market cap remains on course to have dropped a little more than 18% in May, a second successive monthly loss, with prices down around 55% at current levels versus last November’s record peak.

In terms of notable bitcoin-related stories, social media users and various crypto news outlets highlighted that, over the weekend, someone transferred $329,220,000 worth of bitcoin and paid a transaction fee of just $0.12. Crypto enthusiasts used this example to laud bitcoin and crypto’s potential to create massive upheaval in the global financial system.

Elsewhere, despite the recent pullback in bitcoin’s price from record highs last year, the network continues to strengthen, as evidenced most recently in the fact that Bitcoin’s Lightning Network reached a new all-time high capacity of over 3,900 BTC over the weekend.

As per Investopedia, “Bitcoin’s Lightning Network (LN) is a second layer added to Bitcoin’s network enabling transactions to be done between parties off of the blockchain—called off-chain transactions”.

Meanwhile, in terms of notable commentary, veteran crypto trader and billionaire Tim Draper said over the weekend that he stands by his $250,000 price target for bitcoin in the medium-term future. Draper explained that he expects bitcoin usage amongst women, who control a majority of consumption decisions in the US, to rise, driving long-term gains. He added that US retailers are yet to realize that they can save a lot by accepting bitcoin rather than traditional payment methods.

Ethereum Recovers To $1,900 Amid Altcoin Outperformance

Altcoins were mostly performing better than bitcoin on Monday amid the decent tone to crypto risk appetite. Ethereum was last trading about 4.5% higher on Monday near the $1,900 per token level, taking its rebound in the last three days to over 10%.

However, ETH/USD continues to trade below its levels this time last week around the $2,000, as well as a fair amount below its 21DMA at $1,975.

In terms of some of the other major altcoins, Cardano’s ADA and Solana’s SOL were last trading with gains of more than 10% and about 6.0% respectively in the last 24 hours, CoinMarketCap data showed on Monday. Binance’s BNB and Ripple’s XRP were last up about 4.5% and 3.2% over the same time period.

In terms of the meme coins, Shiba Inu was last trading around 10% higher on the day, while Dogecoin was lagging its fellow dog-meme-inspired coin with gains of about 4.0% in the last 24 hours. Dogecoin’s underperformance versus Shiba Inu comes despite Elon Musk confirming over the weekend that SpaceX will soon follow in the path of Tesla in accepting Dogecoin as a payment method for merchandise.

In terms of notable commentary, Real Vision CEO and well-known voice on all things macro Raoul Pal said that, in the long run, he expects altcoins like ethereum to outperform bitcoin. “If you believe the future is in the technology, in blockchain technology, then this whole digital asset space should outperform the safe haven”, he said, referring to bitcoin as the safe haven.

In other notable altcoin news, Terra’s new blockchain that exists without an algorithmic stablecoin, referred to by some as Terra 2.0, launched on Saturday. The price of its new LUNA token initially opened on major exchanges at around $18.0, but very quickly slumped to around $6.0 per token, where it has remained ever since.

Tron’s DeFi TVL Catching Binance Smart Chain

The Trade Value Locked (TVL) across the Decentralised Finance (DeFi) space (i.e. the total amount committed in DeFi smart contracts) remains close to $100 billion on Monday, according to DeFi Llama data. That’s pretty much unchanged since midway through the month, after cross DeFi TVL saw a rapid collapse from around $180 billion at the end of April during the first half of the month amid the collapse of the Terra ecosystem.

Terra’s collapse, triggered by the de-pegging of its algorithmic stablecoin UST, sent a chill across the whole of the DeFi space that continues to hang overconfidence in the market. However, one notable bright spot in recent weeks has been the Tron ecosystem, which continues to grow its TVL. As of Monday, Tron’s TVL is at its highest of the year so far at just under $6.0 billion, up from closer to $4.0 billion at the start of the month.

That makes Tron the only major layer one blockchain ecosystem to have seen DeFi inflows this month. Analysts highlighted that if recent trends continue, Tron may soon surpass the Binance Smart Chain in terms of TVL, which currently stands at around $8.6 billion.

Regulation News

The US state of Louisiana has introduced a bill that would study the impact of crypto donations to political campaigns. If it passes, the Supervisory Committee on Campaign Finance will be given a mandate to carry out an in-depth review.

Elsewhere, Russia has introduced a proposal to allow bitcoin and other cryptocurrency payments in foreign trade. The proposal comes as the country’s economy suffers amid a wave of sanctions from Western powers over its invasion of Ukraine three months ago which have had the effect of largely isolating Russia from the global economy.