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Cryptocurrencies fell one day after a reversal in technology stocks pushed the S&P 500 and Nasdaq Composite to their worst day since 2022.
Bitcoin was lower by 2% at $64,603.34 Thursday, according to Coin Metrics. Disappointing quarterly earnings from Alphabet and Tesla late Tuesday weighed on the rest of the tech sector as investors rotated out of high-risk assets, including cryptocurrencies.
“It’s quite clear the setbacks are more about bigger picture macro forces, with global financial markets in turmoil,” said Joel Kruger, market strategist at LMAX Group. “Concerns around the health and outlook for the global economy have intensified amidst softer economic data, downbeat US earnings, and ineffective accommodative central bank moves. Consequently, there has been nowhere to hide, with most major assets across currencies, commodities and stocks relenting to traditional safe havens.”
The market is also still in the throes of an ongoing Mt. Gox repayment schedule that has resulted in a persistent round of bitcoin selling pressure this month, he added.
Meanwhile, ether fell 6% to $3,172.59 as newly launched ether exchange-traded funds traded for a third day. The Grayscale Ethereum Trust (ETHE), which converted to an ETF, saw $484 million in outflows in the previous session.
“What is happening is the same as when spot bitcoin ETFs were launched back in January,” said Yuya Hasegawa, crypto market analyst at Japanese bitcoin exchange Bitbank. “Grayscale’s Ethereum trust had been trading at [a] discount for a long time, so traders may have bought some shares of the trust and are now selling spot ETH for arbitrage — this is also what happened for bitcoin when the ETFs started trading.”
Bitcoin and other cryptocurrencies are under pressure from the stock market’s tech rout
While bitcoin declined for a couple of weeks after the launch of bitcoin ETFs in January, the ether ETF introductions are being launched into a different market, and investors have potentially positive news to look forward to that could give prices a boost, Hasegawa said.
Thursday marks the start of the Bitcoin 2024 conference, where investors are expecting speeches from pro-bitcoin U.S. politicians on both sides of the aisle as well as Donald Trump. Additionally, expectations for a Fed rate cut in September are growing.
With cryptocurrencies lower across the board, crypto-related stocks also retreated. Coinbase fell 1%, while MicroStrategy was down 3%. The biggest bitcoin miners, Marathon Digital and Riot Platforms, fell 2% and 4%, respectively.
Kruger called recent setbacks in crypto “a minor blip within a strong uptrend,” noting bitcoin and ether are up 51% and 38% year to date in contrast with the S&P 500’s 14% gain during the same period.