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Cryptocurrency prices slipped while equities recovered Thursday afternoon, led by a rally in tech stocks.
Bitcoin was trading more than 4% lower Thursday over 24 hours, dipping below $41,000 for the first time in a month. If the cryptocurrency cannot rebound to $41,250, it will mark the lowest daily close since Dec. 11. Ether (ETH) was also down about 4% Thursday, hovering around $2,430, a low for the past seven days.
Those expecting a run up in bitcoin’s (BTC) price as spot bitcoin ETFs hit the market last week have been disappointed. Bitcoin is now down more than 11% since the product’s first trading day. And, while spot bitcoin ETFs raked in net inflows of more than $1.2 billion in just four days, bitcoin trading volume on exchanges is on the decline, according to data from Bloomberg.
Analysts say there are a few reasons why what is generally accepted as a successful bitcoin ETF launch has not translated into the price of the cryptocurrency. There has been some “sell the news” action, Noelle Acheson, author of the “Crypto is Macro Now” newsletter, said.
“We’re also seeing some rotation out of BTC into ETH, which has arguably been lagging behind and could be the next beneficiary of ETF speculation,” Acheson added. “This can be seen in the sharp drop in the BTC/ETH ratio.”
Bitcoin ETFs became the second-largest ETF commodity in the US behind gold, showing that interest is strong and will only continue to grow for the asset class, Jag Kooner, Bitfinex Head of Derivatives, said.
In stocks, growing skepticism that the Federal Reserve is in any hurry to cut rates had markets pulling back this week, but strong earnings reports, especially from the tech sector, are helping shares recover. The central bank’s Beige Book, released Wednesday, reported signs of a cooling labor market and relatively flat economic activity.
The S&P 500 was up 0.9% while the Nasdaq Composite gained 1.4% Thursday, pushing both back into the green year-to-date after a rocky start to 2024. Analysts say the dip was expectedly short lived as investors digest the news that a soft landing is a real possibility.
“Markets are currently navigating the tension between wanting to see lower interest rates and looking forward to a year when public company profitability finally improves,” Nicolas Colas, co-founder of DataTrek Research, said. “That is a healthy and common mid-cycle market narrative, not something which should engender caution or outright pessimism.”