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Block, MicroStrategy, and Coinbase experienced drawdowns alongside traditional markets even as crypto prices experienced a rise on Monday.
Monday saw a rise in crypto prices, with the leading token Bitcoin (BTC) up 0.3% to $17,087, while Ether (ETH) climbed 0.5% to $1,266. However, the traditional markets slumped to coincide with this rise in crypto prices yesterday. Furthermore, the shares of some prominent digital and tech companies also declined in line with US stock indices. Some of these companies include Block (NYSE: SQ), MicroStrategy (NASDAQ: MSTR), Coinbase (NASDAQ: COIN), and Silvergate Capital (NYSE: SI). In addition, the US Dollar Index traded to its lowest since August on Monday, after being on a downswing in the last few days.
BTC is changing hands at an even $17K as of press time and is still substantially less than a third of its November 2021 all-time high.
Analysis of Prices Development
Although BTC peaked above $17K after trading at that level since Sunday, the leading crypto began to show weakness later on Monday. In addition to Bitcoin and Ether, Binance’s native BNB Coin was up 0.5%, while Ripple’s native XRP token climbed 0.2%. Furthermore, Litecoin (LTC) saw the most substantial gains for the period, surging 7% between Sunday and Monday.
The US Dollar Index was trading at a four-month low of 104.83, further validating an established pattern with Bitcoin. Historically, Bitcoin’s dollar price tends to climb higher when the dollar weakens. The US dollar has already erased more than 50% of gains made this year on bets that the Fed will slow interest rate hikes. According to the CME Group’s FedWatch tool, the probability of a 50-basis point increase in the second week of December is now 77%. The FedWatch analytical tool based its findings on the pricing data of Fed funds futures.
Another reason for the steep easing of US dollar gains is the growing optimism surrounding China’s reopening plans. The Chinese cities of Shanghai and Hangzhou recently relaxed some Covid restrictions, widely viewed as a significant step towards a full reopening. Speaking on this development, Christopher Wong, currency strategist at Overseas Chinese Banking Corp in Singapore, stated:
“Anticipation of China reopening, Fed policy calibration are key thematics that should keep risk proxies such as commodity-linked currencies supported. The strong non-farm payrolls report last Friday only saw a kneejerk bounce in the US dollar.”
Digital, Tech, Crypto Players Slide as Prices of Digital Currencies Rise
In other pricing-related news, the S&P 500 dipped 0.8%, while the Nasdaq 100 declined 0.7%. Meanwhile, the shares of leading American crypto exchange Coinbase were down 0.9% at $47, according to Nasdaq data. Furthermore, mobile payment facilitator Block also saw its stock dip 4.7% to $64.92, with MicroStrategy declining over 5% to $195. At the beginning of the week, shares of the business intelligence, mobile software, and cloud-based service provider were trading above $200.
Other drawdowns for the period saw Silvergate shares slipping 5.2%, while Grayscale’s GBTC fund was trading at a 42.3% discount. In addition, the asset manager also saw the discount on its ETHE product slump to a new record low of 45.7%.