Bitcoin
and other cryptocurrencies slid Friday, with digital assets continuing to underperform the stock market in what may be a worrying sign for crypto sentiment.
The price of
Bitcoin
has fallen 1.5% over the past 24 hours to below $29,800, slipping outside the trading range between the psychologically important $30,000 level and $31,000—a zone that has dominated for much of the past month. After briefly hitting a 13-month high near $31,700 last week, the largest crypto has lost momentum.
“The main sellers of Bitcoin in recent days have been short-term investors,” said Alex Kuptsikevich, an analyst at broker FxPro, citing data from crypto market intelligence group Glassnode. “They have been preparing to take profits for several weeks. Long-term investors who have held the cryptocurrency for more than 12 months are in no hurry to join the sellers.”
Market data suggest that fickle sellers are keeping crypto prices under pressure, which is a departure from action in the stock market, where animal spirits and positive sentiment have pushed stocks higher in recent weeks. While cryptos and stocks are different—and true Bitcoin bulls celebrate the decoupling of token and equity prices—both are fundamentally risk-sensitive assets and have shown similar dynamics this year amid the outlook for interest rates and recession risk.
The
Dow Jones Industrial Average
on Thursday notched its longest winning streak since 2017, and the
S&P 500
has risen some 4% in the past month while Bitcoin has lost 1% in the same period. The tech-heavy
Nasdaq
—most correlated with cryptos—dropped 2.1% on Thursday, which may have weighed on digital assets, but futures tracking the index have popped back up on Friday and it has still outperformed Bitcoin over multiple recent time spans.
Bitcoin, typically more volatile, shouldn’t be overextending the Nasdaq on the downside and lagging on the upside.
“Bitcoin failed to develop any local upward momentum and continues to test the lower boundary of its last trading range,” said Kuptsikevich. “A failure below opens the door to a deeper correction to $28,900.”
Bitcoin’s underperformance is worrying against a backdrop of significant catalysts. Cryptos have been buoyed by
BlackRock
(ticker: BLK) and other financial giants’ filings for spot Bitcoin exchange-traded funds (ETFs), which carried Bitcoin back above $30,000 in June. Last week brought a pro-crypto court ruling that sent Bitcoin to its yearly high. Yet neither catalyst has helped prices hold onto high-water marks.
Sure, regulatory uncertainties continue to hang over crypto and weigh on prices, but signs that the prevailing trend is downward in a historically quiet market—while stocks march higher—is not a good sign. While long-term holders may be steadfast, they alone can’t prop up prices, and positive sentiment among short-term traders is needed to get momentum going again.
Beyond Bitcoin,
Ether
—the second-largest crypto—fell 1% to below $1,900. Smaller cryptos, or altcoins, fared worse, with
Cardano
falling 3% and
Polygon
dropping 2%. Memecoins were more mixed, with
Dogecoin
up 1% and
Shiba Inu
shedding 1%.
Write to Jack Denton at [email protected]
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