Bitcoin, the world’s leading cryptocurrency, faced a downturn on Thursday as waning risk appetite and turbulence in major U.S. technology stocks spilled over into the crypto markets. The price of Bitcoin experienced a 3.9% decline over the past 24 hours, settling at $63,984.9 by 07:50 ET (11:50 GMT).
The correlation between Bitcoin and technology stocks resurfaced prominently, with losses in the cryptocurrency echoing the drop in major U.S. tech stocks. Meta Platforms Inc (NASDAQ:META), the parent company of Facebook, saw a significant 15% decline in aftermarket trading, catalyzing a downturn among its industry counterparts such as Microsoft Corporation (NASDAQ:MSFT) and Alphabet Inc (NASDAQ:GOOGL), which experienced declines of 2% and 3%, respectively.
Bitcoin’s tendency to mirror movements in U.S. technology stocks underscores the perception of both sectors as avenues for high-return, speculative investments. While this correlation had somewhat diminished earlier this year with the surge in Bitcoin sparked by the launch of spot exchange-traded funds (ETFs) in the U.S., recent weeks have witnessed a resurgence in this trend. The fading hype surrounding ETFs, coupled with renewed pressure from the prospect of sustained U.S. interest rate hikes, has reignited the correlation between Bitcoin and tech stocks.
Over the past month, Bitcoin has experienced an approximate 8% decline, compared to a 4% drop in the tech-heavy Nasdaq 100 Futures index. Despite hitting record highs in early March, the cryptocurrency has since remained within a trading range of $60,000 to $70,000.
As market participants await earnings reports from tech giants Microsoft and Alphabet, due later on Thursday, uncertainty prevails amidst concerns over the trajectory of U.S. interest rates. The looming prospect of prolonged rate hikes has weighed on investor sentiment, leading to a broader retreat across the cryptocurrency market.
Altcoins, including Ethereum, Solana, and XRP, witnessed declines amidst persisting apprehensions about interest rate dynamics. Ethereum dropped 5% to $3,114.0, while Solana and XRP registered declines of 8.7% and 4.5%, respectively.
In addition to market volatility, attention is focused on forthcoming economic data releases, including Gross Domestic Product (GDP) data and the Personal Consumption Expenditures (PCE) price index. These indicators are poised to offer insights into the resilience of the U.S. economy and are likely to influence the Federal Reserve’s policy decisions regarding interest rates.
Meanwhile, reports suggest that Morgan Stanley, a prominent Wall Street firm, is contemplating a shift in its approach to Bitcoin exchange-traded funds (ETFs). The firm is reportedly considering allowing its brokers to actively recommend Bitcoin ETFs to clients, reflecting growing demand for these investment vehicles. If implemented, this strategy could potentially drive increased capital inflows into Bitcoin ETFs, providing investors with exposure to Bitcoin without direct ownership of the cryptocurrency. However, Morgan Stanley emphasizes a cautious approach to this potential change, aiming to ensure controlled and responsible access to Bitcoin investment opportunities for its clientele.
