Market Wrap: Bitcoin Rises as Central Banks Maintain Low Rates

Bitcoin continued to rise toward its all-time price high of nearly $66,000 on Monday. The cryptocurrency was up about 5% over the past 24 hours, indicating a rise in bullish sentiment.

Equities and cryptocurrencies are rising as central banks in Europe and the U.S. appear to be in no rush to raise interest rates. Despite plans to ease monetary stimulus, market participants generally view low interest rates as supportive for assets deemed to be risky.

Still, once seasonal strength for cryptos and equities fade, next year could be difficult for risk assets.

“The Federal Reserve has started gently reining in its bond purchase program, and could well tighten more sharply in the months to come, potentially triggering a mini sell-off,” Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, a British financial services company, wrote in an email to CoinDesk.

“What is particularly worrying is that many investors get caught up in the fear of missing out on rapid price gains and have borrowed money to invest in highly risky strategies,” Streeter wrote.

• Bitcoin (BTC): $66,091.48, +5.33%

• Ether (ETH): $4,764.83, +2.9%

• 10-year Treasury yield closed at 1.498%

For now, charts suggest further upside in bitcoin if a breakout above $66,000 is confirmed this week. “Bitcoin has ample room to rise on the technical analysis side, as the bulls have built-up strength during the first cryptocurrency’s month-long consolidation,” Alex Kuptsikevich, a market analyst at FxPro, wrote in an email to CoinDesk.

Despite lower trading volume in the spot market, ether’s option volumes have risen to their highest level since May. Increased trading activity in the option market has coincided with a breakout in ETH to an all-time high of around $4,700.

“Option volumes generally increase when markets turn volatile and traders take directional bets as buyers of options have a potential to earn high gains while keeping their losses limited (due to a non-linear option payoff),” crypto research firm Kaiko wrote in a blog post.

“However, despite low levels of volatility, option volumes recently hit their highest level since May,” Kaiko wrote.

• Shiba Inu snaps five-week winning trend: Popular meme token shiba inu (SHIB) recently hit a new record, with speculative fervor in the token reaching unprecedented levels, CoinDesk’s Omkar Godbole reported. The number of addresses that acquired the cryptocurrency within 20% of the all-time high climbed sixfold in the eight days ended Nov. 2, amounting to 12% of the total count of non-zero addresses. The last time a spike like that occurred was in May, and it paved the way for a 90% crash of the token.

• Sequoia invests in DeFi project Parallel: Sequoia Capital is backing a seven-figure funding round for decentralized finance lending platform Parallel, CoinDesk’s Danny Nelson reported. The funding values Parallel, a Polkadot blockchain-based protocol, at $250 million. Parallel is building a crypto network that hasn’t fully launched yet. The round comes less than two weeks after Sequoia pledged to restructure its investing playbook in part to more aggressively court crypto startups, similar to what fellow venture capital firm Andreessen Horowitz is doing.

• Banking industry likely to capitalize on stablecoin deposit demand: Morgan Stanley’s lead cryptocurrency strategist, Sheena Shah, said in a report that the banking industry will most likely try to capitalize on the demand for stablecoin deposits on the back of the market’s exponential growth, CoinDesk’s Will Canny reported. One reason is that the coins provide access to crypto-deposit interest rates and decentralized finance. Crypto lenders offer over 5% interest on some of the coins, which will cause regulators and governments to respond, the report said. Shah added that cryptocurrencies are trading “similarly to risky assets.”

Most digital assets in the CoinDesk 20 ended the day higher.

Notable winners as of 21:00 UTC (4:00 p.m. ET):

• Bitcoin Cash (BCH): +6.71%