Global Equity Sell-off Puts Strong Selling Pressure on Bitcoin, Ether

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As a seasoned researcher with a background in financial markets and cryptocurrencies, I have witnessed numerous market fluctuations throughout my career. The recent global equity sell-off has undeniably put pressure on Bitcoin and Ethereum, two of the most prominent digital assets.

The global equity market experienced a significant sell-off on July 24, 2022, leading to a downturn in cryptocurrencies such as Bitcoin, ethereum, and other altcoins, which faced intense selling pressure. Wall Street endured its most challenging trading day since early 2022 due to technology stocks’ weakness, and the artificial intelligence sector appeared to be losing momentum.

Global Equity Sell-off Put Pressure on Bitcoin

During Asian trading sessions on Tuesday, Bitcoin experienced a downturn, causing its price to decrease by approximately 2.5% to reach $64,252. The cryptocurrency’s market capitalization was recorded at around $1.266 trillion. Ethereum suffered significant losses, plunging by about 85%, following the day after the Ethereum exchange-traded funds became available for trading in the marketplace.

Over the past two days, BlackRock’s Ethereum ETF has experienced net inflows totaling over $811 million, while Grayscale’s Ethereum ETF (ETHE) has witnessed outflows exceeding the same amount. As a result, the assets under management for ETHE now stand at approximately $7.2 billion. According to Benjamin Celermajer, co-chief investment officer at Magnet Capital, he shared this information with Bloomberg.

As a researcher studying financial markets, I’ve observed that following a disappointing performance by US equities, the crypto market tends to experience a ripple effect in terms of investor sentiment. In simpler terms, after a rough night for stocks in the United States, the crypto market often reflects this negative mood as well.

As an analyst, I’ve observed that Ethereum has experienced selling pressure following the approval of its ETF. This trend may be short-lived if the market sentiment remains favorable.

Alternatively, Bitcoin has displayed notable contrast to international stock markets in recent times. Despite the unclear corporate earnings forecasts, Bitcoin has generally held its ground.

As an analyst, I’ve noticed an intriguing shift in the correlation between Bitcoin and the MSCI index of global shares. Over the past 30 days, the correlation coefficient has approached -0.20, which is quite unusual given that it has mostly remained positive since 2020. Normally, a correlation coefficient of 1 implies perfect synchronization, while a reading of -1 indicates an inverse relationship. The recent negative correlation means that when one asset increases in value, the other tends to decrease.

Global Equity Sell-off Puts Strong Selling Pressure on Bitcoin, Ether

In the face of robust interest for Bitcoin exchange-traded-funds (ETFs) in the United States, the cryptocurrency has experienced a significant 51% increase since the start of the year. Conversely, the MSCI global stock index has primarily held its ground, recording 12% growth so far this year. Moreover, Senator Cynthia Lummis of the US is advocating for designating Bitcoin as a national strategic reserve.

Asian Indices Slide

Outside of the US market, Asian indices are exhibiting vulnerability as well, with the MSCI Asia Pacific Index experiencing a decline of 1.5%. Notably, Japan’s Nikkei 225 Stock Average is undergoing a significant technical correction. Homin Lee, a senior macro strategist at Lombard Odier Singapore Ltd., commented on this development.

There’s a widespread reevaluation happening among experts regarding the cost-vs.-benefit equation for artificial intelligence technology. Concerns over consumer demand continue to surface due to potential indicators of declining data usage in the United States. These concerns may ultimately prove fleeting, but it’s normal for investors to collectively reassess their positions following such a robust market surge.

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2024-07-25 09:40