Cryptocurrency prices have had a strong start to the month. Ethereum Name Service (ENS) has surged by over 30% in the past 24 hours, while Mog Coin, Notcoin, and LayerZero have also seen significant gains of more than 5%. Other top-performing tokens include Dogwifhat, Beam, Ethena, and Ondo Finance.
Bitcoin bounced back to $63,400
These alternative cryptocurrencies rallied for two main reasons. First, they rebounded because of Bitcoin’s performance on July 1st. BTC, the biggest cryptocurrency in the world, jumped to over $63,400, higher than last week’s low of $60,000.
This rebound happened despite no major crypto-related news during the weekend. A likely reason is that this rebound occurred in response to the French election in which Marin Le Pen’s party won by a lesser margin than expected.
As a result, a sense of calm has spread in the financial market, with futures tied to the CAC 40 and Dow Jones indices rallying on Monday morning.
Bitcoin’s rebound also happened as investors bought the dip since the coin got oversold in June when it crashed below $60,000. In most cases, altcoins like LayerZero, Mog Coin, Dogwifhat, and Notcoin do well when Bitcoin rises.
These tokens also rose after the US published encouraging inflation data on Friday. According to the Bureau of Labor Statistics (BLS), the core personal consumer expenditure (PCE) inflation figure dropped for the first time in six months.
The headline and core PCE numbers dropped to 2.6% in May, which is positive for interest rates. Most analysts believe that the Federal Reserve will start cutting interest rates later this year if inflation continues falling. Cryptocurrencies thrive in such an environment.
A potential dead cat bounce
There are other potential reasons why these tokens are rebounding. For example, July 1st is the start of the month and the beginning of the third quarter. With most cryptocurrencies falling in the second quarter, this rebound is likely as hopes of a broader rally in the third quarter intensify.
In most cases, stocks and cryptocurrencies rebound or fall sharply at the beginning of the month or quarter.
However, it’s important to note that the sustainability of these gains is uncertain. Bitcoin, for instance, has already formed a double-top chart pattern and moved below its 50-day and 100-day moving averages.
This could indicate that the current rebound is a ‘dead cat bounce’, a temporary recovery that is often followed by a significant downturn.
