Tech Stocks Dragging Bitcoin, Ether, & Crypto’s Down, But ‘Fundamentals Still Strong’
This has been just a technical correction, but while BTC continues to range, gold prices are finally showing strength, surging to $1,840 per ounce with the US dollar index on a downtrend since late March.
Bitcoin remains range-bound.
Ever since late February, the price of Bitcoin has remained near $55,000, for the most part. The leading crypto asset did see a new all-time high to $65,000, but there have been several retracements during this time period, unlike the vertical move from $3,800 low in March 2020 to $42,000 in early January.
Bitcoin’s latest attempt at $60k was yet again marred by the sell-off in the tech stocks.
On Monday, BTC/USD went as high as $59,600 only to fall under $53,900. The drop of 9.5% in bitcoin price means altcoins also recorded losses.
While some coins like XLM, SUSHI, AVAX, EOS, XTZ, ZRX XRP, ZIL, LINK, LTC, and THETA saw deeper losses of 8% to 14%, some actually recorded gains such as SAFEMOON, YFI, UMA, COMP, and DOGE including exchange tokens viz. HT, GT, LEO, and OKB.
The latest pullback in the crypto market came after a strong rally and due to traditional markets tumbling down.
S&P 500 went down by 1.1%, while Dow Jones hit a new ATH before dropping less than 1%.
4. Hedge funds selling equities
h/t @LizAnnSonders pic.twitter.com/sJNSuyNHVU
— Callum Thomas (@Callum_Thomas) May 8, 2021
Tech-heavy Nasdaq slid down 3% from Friday’s high, which could be because of the inflation concerns and expectations leaping to the highest level since 2006. Since March, traders were bracing for deadlines for weeks with short interest in the Nasdaq 100 exchange-traded fund (ETF) in free fall. Flows were actually negative in April.
“The prospect of inflation is leading investors to seek out areas that are better insulated from the threat of rising prices,” said Adam Phillips, managing director of portfolio strategy at EP Wealth Advisors.
Bitcoin proponent and COIN shareholder Cathie Wood’s ARK Innovation ETF (ARKK) sank 5.2% to the lowest since November; it has dropped 16% so far this year.
“Wild day. Tech stocks dragged everything down temporarily. ETH longs got rinsed on Binance and Huobi. ETH quarterly basis dropped from 21% to 5%, to reverse in full. ETH now >4K and funding flat to negative. Tech still getting roasted, reason for concern,” said trader and economist Alex Kruger.
The US dollar index is also on a downtrend since late March and currently hovers just above 90. During this time, gold prices are finally showing strength, going to $1,840 per ounce.
Despite the correction in Bitcoin prices, industry experts are confident that the crypto assets’ bullish structure is intact.
“This BTC correction is more like a technical correction, and the fundamentals are still strong. US institutional demand has driven this bull market. There's no change in this trend,” said Ki Young Ju, CEO of CryptoQuant.
Bitcoin hash rate has hit a new all-time high after seeing a big drop last month, and this has the weekly active addresses recording a big spike to over 1.2 million. Also, another publicly-listed company in Hong Kong, Success Global, announced that it had purchased 23.4 BTC worth $1.3 million to hedge against the global quantitative easing.