(Kitco News) – Monday saw the return of volatility to financial markets as stocks opened higher only to slide into the red as the day progressed, while cryptocurrency prices whipsawed but ultimately climbed higher as bulls looked to break free of rangebound trading.
The primary source of volatility was a weaker-than-expected reading on the manufacturing sector, which renewed the debate about whether the Fed would initiate a rate cut as early as September. The CME FedWatch tool now shows expectations for a September cut have risen to 59%, up from 49% a week ago.
Bond yields also trended lower, with the yield on the 10-year Treasury falling roughly 10 basis points to trade near 4.394%. The DXY also fell 0.50% and traded at 104.107 at the time of writing.
At the closing bell, the S&P and Nasdaq finished in the green, up 0.11% and 0.56%, respectively, while the Dow lost 0.3%.
Data provided by TradingView shows that Bitcoin (BTC) climbed from a low of $67,582 in the early hours on Monday to hit a high of $70,300, and has since pulled back to support at $69,000.
BTC/USD Chart by TradingView
At the time of writing, BTC trades at $69,120, an increase of 1.97% on the 24-hour chart.
Consolidation nearing its end
“BTC and ETH rallied over the weekend from Friday’s lows of 66,700, despite BTC experiencing its lowest weekend volume in four months,” said analysts at Secure Digital Markets. “BTC has been testing higher levels but has been unable to break through the $72K mark over the past two weeks. Meanwhile, ETHBTC is trending lower after maintaining elevated levels since May 23rd, leading to BTC outperforming ETH by 5% since the peak of the recent squeeze.”
ETH/BTC Chart by TradingView
While Bitcoin has struggled to break through $72,000, analysts at Bitfinex said that could soon come to an end based on rising demand from spot BTC exchange-traded funds (ETFs).
“After Bitcoin reached a new all-time high of $73,666 in March, Long-Term Holders (LTHs) sold substantial amounts of their BTC, leading to increased supply and a period of price correction and consolidation,” analysts at Bitfinex said. “This correction phase now appears to be nearing an end.”
“In the last two weeks, Bitcoin ETFs have seen resurgent demand, recording net inflows of $136 million per day, exceeding the $32 million daily sell pressure from miners post-halving by more than four times,” they said.
“We also see LTHs, who had sold significant portions of their holdings at the peak, are now re-accumulating Bitcoin for the first time since December 2023,” they noted. “This trend reflects long-term bullish sentiment among holders. We are now firmly in a phase of re-accumulation, as we see sellers exhausted and buying becoming increasingly consistent.”
And it's not just ETF flows that have Bitfinex analysts bullish as exchange reserves, which track the total amount of Bitcoin held in exchange wallets, have been declining.
“Exchange reserves of Bitcoin have been falling and new accumulation addresses, over the past month, have been increasing,” Bitfinex said.
“A decrease in this metric is seen as bullish, since it reduces the available supply, whereas an increase is bearish as it indicates more Bitcoin is ready to be sold,” they said. “Since February, the Bitcoin exchange reserve has sharply declined, contributing to the recent price rally. This decline has intensified in recent days as investors anticipate a potential new all-time high, further reducing supply and possibly setting the stage for another rally.”
Market analyst Kaleo summed up the sentiment in the crypto ecosystem succinctly, tweeting, “It's time for round 2. $100K is a magnet.”
#Bitcoin / $BTC
It's time for round 2.
$100K is a magnet. pic.twitter.com/yCNIVFMQLv— K A L E O (@CryptoKaleo) June 3, 2024
Altcoins start the week in an uptrend
It was a positive day for altcoins as the majority of tokens in the top 200 recorded gains to start the week.
Daily cryptocurrency market performance. Source: Coin360
Meme coins continue to be popular among traders as DOG•GO•TO•THE•MOON (DOG) led the field with a gain of 21.5% while FLOKI (FLOKI) climbed 16%, and Kaspa rounded out the top three with a gain of 14%. Highstreet (HIGH) was the biggest loser, falling 8.6%, followed by 6.3% losses for Safe (SAFE) and Aveo (AVEO).
The overall cryptocurrency market cap now stands at $2.57 trillion, and Bitcoin’s dominance rate is 53.2%.
