This morning, Bitcoin surpassed the $64,000 mark, marking an impressive start to the week for major cryptocurrencies. This momentum comes amid a renewed interest in certain digital assets, as well as anticipation of stimulus measures in China, although these announcements have fallen short of market expectations. Other cryptos such as ETH and SOL have also seen notable gains, while XRP and Binance’s BNB have not benefitted.
Massive Short Liquidations and the Rise of Memecoins
This surge in Bitcoin has resulted in the liquidation of over $100 million worth of short positions, according to CoinGlass data. These liquidations are a direct consequence of bets against price increases that were caught off guard by this rapid market movement.
At the same time, certain memecoins dominated exchanges over the weekend, with significant gains. This enthusiasm for memecoins is fueled by discussions of a potential crypto “supercycle,” attracting traders’ attention to high-risk assets.
Other Bitcoin-based cryptos, such as memecoins Ordinals and Runes, experienced increases of up to 10% over the weekend, continuing a weekly trend of over 100%. However, these gains have slightly decreased in the last 24 hours, reflecting some volatility and aligning with suspicions of a local top.
Global Economic Factors Favoring the Market
The rise of Bitcoin has also coincided with some resilience in Chinese markets, bolstered by expectations of new stimulus measures. Chinese Finance Minister Lan Fo’an promised additional measures to support the real estate sector, including increased public borrowing, during a briefing over the weekend. While the announcements fell short of investors’ expectations, they were enough to reignite risk appetite.
In the US markets, economic prospects remain relatively strong, with positive indicators for inflation. Data from the Consumer Price Index (CPI) and the Producer Price Index (PPI) showed stable inflation, reassuring the markets about the future trajectory of the Federal Reserve’s monetary policy. This situation has reinforced expectations of a 0.25% interest rate cut at the next Fed meeting in December, but it has also dashed hopes for a larger rate cut.
Memecoins vs Infrastructure: Diverging Performances
While major cryptocurrencies have shown signs of recovery, certain sectors of the crypto market, such as storage solutions and Layer 2, have suffered from low volatility and waning interest. Additionally, ‘VC coins,’ tokens backed by venture capital funds, continue to lose popularity as traders perceive them as overvalued and less attractive to individual investors.
As Bitcoin surpasses $64,000, the increasing volatility in riskier assets like memecoins could signal unexpected market movements in the weeks to come. Investors will need to remain vigilant of major economic developments, particularly around monetary policy announcements and global economic stimuli, to anticipate the next moves in the crypto sector.
