Bitcoin Nears $106K as Crypto Markets Defy Risk-Off Sentiment

Bitcoin (BTC) and Ethereum (ETH) led crypto markets higher over the past 24 hours, defying broader market weakness following Moody’s surprise downgrade of U.S. credit. BTC rose back toward the $106,000 level, briefly touching $107,000 on Sunday, while ETH jumped 8% to trade above $2,900.

This resilience comes amid declining equities and gold prices. Gold has dropped nearly 7% from May highs, while Bitcoin’s gains reflect growing investor confidence in its role as a store of value. QCP Capital noted in a Telegram update that BTC’s weekend rally underscores its emerging status as a safe haven asset, especially as equities falter. Spot bitcoin ETFs also continued to see steady inflows, supporting the bullish trend despite some leveraged long liquidations in derivatives markets.

Ethereum’s strength appears tied to renewed interest in staking and broader optimism following the recent Pectra upgrade, although no specific trigger was identified on Monday. Other altcoins also posted moderate gains, with Solana (SOL), XRP, BNB, and Dogecoin (DOGE) up 2-4%. The CoinDesk 20 Index rose nearly 2% overall.

Notably, Aave’s AAVE token surged over 25% in a speculative move unbacked by any immediate protocol news. Despite the rally, AAVE remains down more than 60% from its 2021 peak.

Analysts are watching a potential decoupling between Bitcoin and traditional assets like gold. Augustine Fan of SignalPlus highlighted diverging ETF flows and futures performance, suggesting that BTC is gaining strength as a unique asset class. As micro-correlations break down, traders may find new relative value opportunities between crypto and traditional markets.

With crypto markets diverging from conventional risk trends, investor sentiment appears to be shifting in favor of digital assets.