blockworks.co
Bitcoin extended its rally Monday after a brief flat stint while ether broke out to highs not seen in almost two years. Equities traded sideways ahead of a busy week for economic news and as a potential government shutdown looms.
Bitcoin (BTC) moved 1% higher Monday morning in New York after gaining as much as 2.2% over the weekend, even as data shows that weekend trading activity is on the decline. Ether (ETH) hovered around $3,100 Monday, extending its rally that saw the cryptocurrency break through the $3,000 for the first time since April 2022.
The share of bitcoin traded on weekends has been on the decline for a number of years, dropping from 24% in 2018 to 17% in 2023, according to data from Kaiko.
Read more: Satoshi warned against labeling bitcoin as an ‘investment’
“The decline suggests worsening liquidity conditions during weekends and could be explained by both increased institutional participation and worsening market infrastructure,” Kaiko analysts said Monday. “So far in 2024, just 13% of all BTC transactions between Jan. 1 and Feb. 20 were executed over the weekend.”
Analysts from research firm Matrixport say their bitcoin price target of $63,000 by March 2024 — which they set in October 2022 — is still attainable, especially given the timing of the next halving cycle.
Read more: How the halving could impact bitcoin’s price
“Historically, Bitcoin has also tended to rally into the halving, even though the last halving cycle was heavily influenced by the post-COVID-19 stimulus injections of the various governments worldwide,” Matrixport researchers wrote in a recent note.
Ether’s rally likely has some steam left, Kaiko researchers added, noting that daily spot trading volume has surpassed $5 billion for almost the entire month of February.
Macroeconomic conditions are pushing investors into “safe haven” assets, analysts say. Some have noted that expectations of Eurozone interest rates are declining faster than those in the US are heating up, which would cause the euro to drop against US dollars.
“A more enduring weakening of trust in US economic strength, given geopolitical trends, internal politics as well as the accumulating strain in the banking industry and jobs market, could encourage a closer look at ‘unrelated’ non-sovereign currencies [like] bitcoin and gold,” Noelle Acheson, author of the ‘Crypto is Macro Now’ newsletter, said.
Read more: The next bitcoin halving is coming. Here’s what you need to know
Stocks posted modest gains Monday, with the S&P 500 and Nasdaq Composite indexes gaining about 0.1% and 0.2%, respectively, shortly after the open. Congressional leaders have until this Friday to secure a budget or the government will head into a shutdown, which would lead to pressure on stocks, Tom Essaye, founder of Sevens Report Research, said.
The Federal Reserve’s preferred inflation metric, the Core PCE Price Index, is slated for release Thursday, a key metric traders will be watching, Essaye said, especially as stocks have largely been able to avoid massive selloffs following previous disappointing inflation prints.
“One of the main reasons stocks were able to look past the hot CPI and PPI was because Chicago Fed President Goolsbee said the Fed doesn’t really follow CPI and instead focused on the Core PCE Price Index,” Essaye said. “Well, that’s what’s coming on Thursday, so it better not show a firming of inflation like CPI did, otherwise markets will have to more fully acknowledge that inflation pressures could be firming up and that means higher yields and more of a headwind on stocks.”