Stocks outshine bitcoin again ahead of Memorial Day weekend

Investment And Finance Concept - Bitcoin Symbol Sitting On Yellow Financial Graph Background

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Bitcoin (BTC-USD) and other major cryptocurrencies are getting dragged some more in Friday morning trading, while stocks extend their week-long rally heading into Memorial Day weekend.

Specifically, bitcoin (BTC-USD -2.1%) is slumping to $28.6K as of shortly before 11:00 a.m. ET. Ether (ETH-USD -5.2%) is dipping to $1.75K. Solana (SOL-USD -6.2%), avalanche (AVAX-USD -8.3%), near protocol (NEAR-USD -8.3%) and apecoin (APE-USD -10.3%) are among some of the biggest intraday percentage decliners.

On the flip side, all three major U.S. stock indices are marching higher, with Dow Jones (DJI) +0.8%, S&P 500 (SP500) +1.5% and Nasdaq (COMP.IND) +2.1%.

As liquidity remains low in risk assets, “things could get weird” over the long weekend, as increasing leverage and a slew of macro headwinds like tighter monetary policy “could lead to large price swings, and potentially further volatility to the downside in the immediate term,” said Sean Farrell, head of digital-asset strategy at Fundstrat, as reported by Bloomberg.

For context, total crypto volume for the Memorial Day period in 2020 dipped 43% and fell again by 35% a year later, Farrell noted. If history serves as any guide, trading activity for the upcoming holidays will likely be "extremely low," he added.

Separately, despite the ongoing crypto rout, bitcoin's (BTC-USD) market cap dominance is jumping to its highest since October 2020, GlobalBlock analyst Marcus Sotiriou wrote in a note. Still, BTC's market cap of $555.1B is down sharply from its peak of $1.27T in November 2021.

"I think investors preferring Bitcoin in this environment is not a surprise, as they deem it as a safe haven during this time of uncertainty with macro headwinds," Sotiriou wrote. "Even though Bitcoin is also falling, it is still draining liquidity from other altcoin pairs, as there is a lack of buyers in altcoins in this current market" following the collapse of algorithmic stablecoin TerraUSD (UST-USD) and its sister coin Luna (LUNA-USD).

Earlier this week, (May 26) bitcoin dumped further below $30K, while stocks caught a bid.

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