Crypto markets have taken a brief reprieve after adding more than 30% to their collective capitalization since the start of the year.

Bellwether crypto bitcoin (BTC) rose to a peak of $23,360 on Saturday — its highest point in more than five months. BTC sat at $22,900 as of 7 am, ET.

NYDIG reported an influx of liquidations on short bitcoin positions over the 10 days leading up to Friday. 

“While the data shows these liquidations occurred during bitcoin’s biggest price moves, our conclusion is that while liquidations likely played a factor in the rally, they are unlikely to account for all of the recent price action,” the firm said in its newsletter.

Ether (ETH) also saw a major uplift, gaining 7% on Friday to finish at $1,650, where it now trades. BTC and ETH are both up around 37% year to date but remain flat over the past six months.

Ethereum developers have also begun shifting their focus to the Shanghai hard fork, the next major piece to the Merge roadmap, expected sometime in March. 

Digital assets’ total market value now sits at $1.08 trillion, up from $828.6 billion on Jan. 1.

Ethereum’s Shanghai upgrade, which will enable validators to finally withdraw their staked ether, should help bring better price parity for liquid staking derivatives, Blockworks analyst Ryan West said in a research note.

Traders should be aware short-term sell pressure may follow Shanghai’s launch as stakers look to lock in profits, he said. Mid-term price action may see a boost from new entrants eager to explore fresh staking opportunities.

Markets go risk on — for now

Appetite for risk-on assets across crypto and traditional equities has been buoyed by expectations of tightened US Federal Reserve monetary policy.

Market participants are likely pricing in the chance the Fed will shift its target rate hike by 25 basis points — down from its previous 50 and 75 basis point hikes — at the upcoming FOMC meeting on Feb. 1.

CME Group’s FedWatch tool is now flashing a 99.8% likelihood of that outcome, which would represent slowing in the Fed’s inflation-curbing strategy.

Digital assets have continued tracking traditional equities, which closed higher on Friday. The broad S&P 500 index rose 1.9% while the tech-heavy Nasdaq 100 jumped 2.9%.

The 30-day correlation between the S&P 500 and bitcoin is also rising slightly after reaching one-year lows in late December.

A coefficient of one means the corresponding assets are completely aligned. A negative-one reading signals the opposite.

Eyeing the benchmark for Australian equity performance, the S&P/ASX 200 index rose 0.7%, or 5 basis points, to 7,457 on Monday. The index is now up more than 7% year to date.

The index, like most other majors across the globe, has consistently printed a higher high daily close for more than two weeks. Japan’s Nikkei 500 and Nikkei 225 indexes have both gained nearly 5% so far this year.

Markets across Hong Kong, Taiwan, Singapore, Malaysia and China were closed on Monday, courtesy of Lunar New Year celebrations.

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