Memecoins surged on Sunday while bitcoin and ether tumbled. However, Dogecoin was down 6% in early trading on Monday, although Shiba Inu continued to rise, while bitcoin and ether continued to fall. Bitcoin was down almost 1% in early trades, while either was off by more than 1%.
Major Coins Fail To Hold Key Levels While Memecoins Surge
The major coins like bitcoin and either continue to track risk assets like equities, as futures for the Nasdaq and S&P 500 declined. Bitcoin surpassed $25,000 for the first time in more than a month, while ether rose above $2,000.
However, neither cryptocurrency managed to hold onto these key levels, as they both had fallen below them by Monday morning. Meanwhile, Shiba Inu and Dogecoin each rallied more than 15% over the course of 24 hours. Dogecoin even entered the list of the top 10 cryptocurrencies by market capitalization as its total valuation surpassed $10 billion.
In an email early Monday, Craig Erlam of OANDA suggested that profit-taking could be restraining the bitcoin and ether prices.
"Bitcoin has tested the water above $25,000 and been pushed back on the first attempt," he wrote. "It seems the cryptocurrency, like many other instruments, is testing a potentially significant barrier following the recent recovery, and we may be seeing some profit-taking. Whether that becomes a full rotation lower isn't clear yet, but it doesn't appear to have the momentum for a breakout at this time."
Scaramucci Sees Two Factors Propping Up Bitcoin
Anthony Scaramucci of Skybridge Capital told CNBC that he thinks bitcoin's long-term fundamentals are "quite good" despite the near-term losses we've been seeing. He's also confident that two significant things have occurred among institutional investors that "will likely generate demand for bitcoin."
The cryptocurrency remains more than 60% off its record high near $69,000 set in November. Coin Metrics data shows that in June, bitcoin plummeted to its lowest level since December 2020, falling to $17,958.
Scaramucci expects a "demand shock" due to Fidelity's decision to allow its 401k products to offer bitcoin. Financial services provider Fidelity Investments is now allowing companies to offer their employees the option to invest up to 20% of their savings and retirement plan in bitcoin.
The other tailwind he sees for bitcoin demand is Blackrock's offer of a private trust to enable clients to invest in bitcoin. Blackrock manages about $8.5 trillion in assets and recently announced that it was partnering with Coinbase to allow its institutional clients to buy cryptocurrency.