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Featured SpeakerAlex ThornHead of Firmwide ResearchGalaxy
Hear Alex Thorn share his take on "Bitcoin and Inflation: It’s Complicated” at Consensus 2023.Secure Your SeatFacebook iconLinkedin iconTwitter icon
Featured SpeakerAlex ThornHead of Firmwide ResearchGalaxy
Hear Alex Thorn share his take on "Bitcoin and Inflation: It’s Complicated” at Consensus 2023.Secure Your Seat
Bitcoin (BTC) held firm above $30,000 on Tuesday as investors awaited Wednesday’s U.S. consumer price index (CPI) report for March and Ethereum’s Shapella upgrade.
The largest cryptocurrency by market value was recently hovering over $30,200, up over 3% in the past 24 hours. BTC topped the psychologically important $30,000 level late Monday evening (ET) for the first time since last June. Analysts expect the March CPI to continue a recent cooling trend with the year-over-year rate rising 5.2%, down from February’s 6%. The month-over-month rate is also expected to cool.
“Traders [are] speculating that this week’s CPI number could come in at a level that gives the Fed reason to think about pausing raising rates in the next meeting, thereby giving a boost to assets like bitcoin,” James Lavish, managing partner at Bitcoin Opportunity Fund, told CoinDesk in an email.
Lavish added that if BTC continues to rise “with conviction,” a move right into the mid to high $30,000 would be likely, forcing short speculators to cover and buy instead. Some investors are trying to get positioned ahead of that.”
Analysts at K33 Research highlighted in a note to clients on Tuesday that open interest (OI) in BTC perpetuals surged by 10% to 297,000 BTC on Monday to reach its highest daily growth in open interest since early October. That spurt was followed by volatility and an intraday decline.
“While BTC’s performance following surges in OI has varied, it has tended to foreshadow long or short squeezes,” analysts wrote, adding that similar daily growth in OI occurred during a spring rally in 2022 and before the short squeeze of July 2021.
Ether (ETH), the second-largest cryptocurrency, was recently trading at around $1,895, up 0.3% from Monday, same time. Validators and market watchers will be watching Ethereum’s Shapella upgrade, which is expected to go live Wednesday evening (ET) and will mean that validators can withdraw their long-locked-up ETH from the Beacon Chain.
Crypto data firm Kaiko highlighted in a Tuesday report that ETH markets have been heavily spot-driven over the past month, with the perpetual futures-to-spot ratio hitting its lowest level since the network’s Merge in September. In contrast, that ratio had surged to nearly double pre-Merge levels at the start of the year.
ETH perpetual futures-to-spot ratio (Kaiko)
Among other digital tokens, Solana’s SOL surged over 12% to trade around $23.2, while ETC, the token of Ethereum Classic, an offshoot, or fork, of Ethereum, gained over 4% to change hands at $21.6. The CoinDesk Market Index, which measures overall crypto market performance, was up 2.3% for the day.
The crypto market’s rally also coincided with crypto-related stocks’ continued momentum from Monday. Shares of bitcoin mining firm Marathon Digital Holdings (MARA) closed up 12% on Tuesday, while both exchange Coinbase (COIN) and business software company MicroStrategy (MSTR), a large corporate holder of BTC, were up more than 6%.
Equity markets were mixed Tuesday afternoon, with the S&P 500 closing flat and the tech-heavy Nasdaq sliding 0.4%. The Dow Jones Industrial Average (DJIA) was up 0.2%.
DISCLOSURE
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