Cryptocurrencies' rally cools as Ethereum upgrade optimism loses steam

Cryptocurrencies were mostly little changed as the recent rally in market bellwethers Bitcoin and Ether cooled.
 

Bitcoin was down less than 1% to about $24,250 as of 12:17 p.m. in New York, after reaching $25,000 over the weekend for the first time since the boarder market crashed in June. The largest cryptocurrency by market value is up about 18% since June 17. Bitcoin hit a record of almost $69,000 in the fall.
 

Ether, which the led gains amid optimism over the blockchain software update know as the Merge, was down about 1% to $1,919. It touched $2,000 on Saturday and has surged about 75% since mid-June. Ether traded at almost $4,860 in November.
 

The rally had also lifted meme tokens like Dogecoin and those for alternative platforms including Polygon. They were down 5.3% and 4.8%, respectively on Monday.
 

Matt Maley, chief market strategist at Miller Tabak & Co, said that the pullback was natural, as investors took “some chips off the table.” Maley directed attention at the issues in the Chinese market as a potential cause of the investor wariness in today’s session.
 

“We have to realize that the crypto market is still speculative,” Maley said. “I think it’s normal and healthy, digesting the recent gains, especially in Ethereum.”
 

Alkesh Shah, global crypto and digital asset strategist at Bank of America, said that the recent crypto increase was “likely macro driven,” and pointed out a strong correlation between digital and risk assets in a note.
 

“Our view is that risks related to rising rates, inflation and a mild recession are likely discounted, but the potential for a hard recession (our macro colleagues expect S&P EPS to fall in 2023) may result in growth underperformance and another risk asset correction, including crypto/digital assets,” Shah said.