Cryptocurrency prices fell as stocks rallied Thursday afternoon, led by a rally in technology stocks.
Bitcoin traded down more than 4% in a 24-hour period on Thursday, falling below $41,000 for the first time in a month. If the cryptocurrency fails to climb back to $41,250, it will mark the lowest daily close since December 11. Ether (ETH) also fell about 4% on Thursday to settle around $2,430, a seven-day low.
Those who expected the price of bitcoin (BTC) to rise when spot bitcoin ETFs hit the market last week were disappointed. Bitcoin is now down more than 11% since the product’s first day of trading. And, while spot bitcoin ETFs have garnered net inflows of more than $1.2 billion in just four days, bitcoin trading volume on exchanges has been declining, according to Bloomberg data.
Analysts say there are a few reasons why what is generally accepted as a successful launch of a bitcoin ETF has not translated into the cryptocurrency’s price. There has been some “sell the news” action, said Noelle Acheson, author of the newsletter “Crypto is Macro Now.”
“We are also seeing some rotation from BTC to ETH, which is likely lagging behind and could be the next beneficiary of ETF speculation,” Acheson added. “This can be seen in the sharp decline in the BTC/ETH ratio.”
Bitcoin ETFs have become the second largest commodity ETF in the United States after gold, showing that interest is strong and will continue to grow for this asset class, said Jag Kooner, head of derivatives at Bitfinex.
As for stocks, growing skepticism that the Federal Reserve is in a hurry to cut rates has sent markets retreating this week, but robust earnings reports, especially from the tech sector, are helping stocks recover. The central bank’s Beige Book, released on Wednesday, reports signs of a cooling job market and relatively stagnant economic activity.
The S&P 500 rose 0.9% while the Nasdaq Composite gained 1.4% on Thursday, putting both back in positive territory year-to-date after a rocky start to 2024. Analysts say the decline was, as expected , short-lived as investors digest the news of weak performance. landing is a real possibility.
“Markets are currently facing the tension between the desire to see lower interest rates and the anticipation of a year in which the profitability of public companies finally improves,” said Nicolas Colas, co-founder of DataTrek Research. “This is a common, healthy mid-cycle market narrative, not something that should induce caution or outright pessimism.”
