Over recent months, it appears the momentum of the cryptocurrency market has slightly declined. Despite an impressive 76% rally this year so far, it’s not all been smooth sailing for Bitcoin (BTC). Its growth recently tapered off amidst a modest downfall this month, seemingly unable to outstrip stocks in terms of momentum. According to Bloomberg, the leading 100 digital assets, gauged by market cap, have seen a yearly rise of approximately 46% while NASDAQ 100 has been hot on its heels with a near-equal 42% gain.
Earlier this year in April, cryptocurrency was considerably outpacing the stock market. Digital currency demand surged in the wake of a string of US bank failures in March. Bitcoin, in particular, found itself linked more closely to gold and less so to equities. However, this upward swing was checked by mounting legal pressure on leading crypto businesses such as Binance and Coinbase by the Commodities and Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC). So, while the stocks continued to enjoy growth influenced by the budding artificial intelligence industry, crypto fell behind.
Despite all this, the crypto market does show some resilience. After BlackRock filed for a spot ETF for Bitcoin in June and Ripple scored a win in its lawsuit with the SEC, the digital currency market has seen some recovery. However, a word of caution, as Bitcoin’s Bollinger band, a key technical analysis tool used to determine overbought and oversold levels, is now at its narrowest in seven years, indicating potential volatility looming. This could mean a downward correction might be on the horizon.
Caroline Mauron, co-founder of digital-asset derivatives liquidity provider OrBit Markets, speaking to Bloomberg expressed her belief that the downside risk for crypto should be limited considering the Federal Reserve seems to be nearing the end of its current rate hiking cycle.
However, investors ought to remain cautious. Although the impending 25 basis points interest rate hike by the Federal Reserve could be the last of its kind for a while, providing possible relief for both the crypto and stocks market, there is no guarantee that this will be the case. Like always, the financial market landscape is ever-changing and uncertain.
Source: Cryptonews
