Contents
- Incoming Rate Increase
- No Visible Catalysts Post ETF News
Despite Bitcoin's (BTC) optimistic 76% year-to-date (YTD) climb, some relative stagnation and a minor dip this month sees the digital currency market losing ground to equities.
According to Bloomberg's index of the top 100 digital assets by market size, crypto is up 46% year to date, while the NASDAQ 100 is up 42%.
Crypto's advantage was considerably more obvious in April, when the index was up 60% year to date, compared to the NASDAQ's 20% increase. Demand for digital currencies was booming at the time, after a succession of bank failures in the United States in March, which increased Bitcoin's connection to gold while diminishing its correlation to stocks.
However, the asset class collapsed in the months that followed, due to an avalanche of legal pressure from the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) on key crypto businesses like as Binance and Coinbase.
The SEC labelled many popular cryptos, including BNB, Cardano (ADA), and Polygon (MATIC), as unregistered securities in twin lawsuits filed against both exchanges last month. According to CoinGecko, each currency has dropped around 20%, 20%, and 16% since the lawsuits were filed.
Meanwhile, equities have benefited from the increased excitement around artificial intelligence, momentarily surpassing crypto in YTD gain in June.
Incoming Rate Increase
After BlackRock applied for a Bitcoin spot ETF in late June, and Ripple had a favourable verdict in its SEC litigation earlier this month, cryptocurrency rebounded considerably. Despite this, both indices remain close.
No Visible Catalysts Post ETF News
"The rally has stalled after the initial excitement generated by the ETF news, and there are no other visible catalysts on the horizon," said Caroline Mauron, co-founder of digital-asset derivatives liquidity firm OrBit Markets.
She went on to say that downside risk "should be limited as the Fed is nearing the end of the current rate-hiking cycle, which should support risk assets, including crypto."
On Wednesday, the Federal Reserve is poised to announce another 25 basis point interest rate rise, which might be the last for a long time. During 2022, related rises hammered both bitcoin and stocks, so a prospective pause might indicate to investors that it's time to purchase.
However, several indications indicate caution in crypto: Bitcoin's Bolinger band is currently at its smallest in seven years, indicating that volatility - perhaps to the downside - is on the way.
According to Tony Sycamore, market analyst at IG Australia Pty, Bitcoin's slide "should extend towards $26,000/$25,000 before finding support."
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