ETFs
The Nasdaq has just reached its seventh consecutive record: why hasn’t Bitcoin moved? – DL News
- The Nasdaq Composite is soaring.
- But Bitcoin is still lagging mid-$60,000.
- Here are four factors holding back the crypto rally.
The Nasdaq Composite is in great shape, having just achieved its seventh consecutive day of records.
The Dow Jones Industrial Average and S&P 500 saw similar highs, thanks to the chipmaker Nvidia and the investor frenzy around artificial intelligence.
Bitcoin, however, has failed to keep up.
While market observers predict that cryptocurrency could reach up to $200,000 over the next year, it held steady at around $65,000 as of last week.
Here are four factors holding back the leading cryptocurrency.
Digesting the Halving
Bitcoin is simply catching its breath after a terrific start to the year, said Adam Morgan McCarthy, an analyst at crypto data and analytics firm Kaiko Research. DL News.
The Nasdaq may be up 18% this year so far, but Bitcoin is up 53%, McCarthy noted. And it’s not just because Bitcoin tends to be more volatile – they “just move based on different factors.”
“Bitcoin has had a very strong start to the year thanks to regulatory developments in the United States in particular,” Morgan said. “The next drivers for Bitcoin will be the long-term impact of the last halving and ETF demand.”
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The fourth half, which occurred in mid-April, halving the amount of Bitcoin miners receive to maintain the blockchain. Because less Bitcoin is being created, market participants expect the supply shock to drive the price higher.
But the effects of the halving “usually take a few months to manifest,” McCarthy said – and are most visible once demand for Bitcoin picks up.
“Demand for ETFs in the U.S. could have a big impact here, as more advisors and firms bring on new investors in the coming months,” McCarthy said.
It’s normal for the quadrennial event to be followed by months of subdued trading, agreed Jacob Joseph, research analyst at CCData. Especially since the markets overheated in the months leading up to the halving.
Centralized exchanges recorded unprecedented new volumes in March, and speculation, as indicated by open interest, “was at unprecedented levels,” Joseph said. DL News.
Open interest is a metric that reflects the total number of futures contracts outstanding. High open interest tends to be due to a speculative frenzy.
“In this sense, the market needs the current cooling period or price consolidation before seeing the typical rapid price expansion of Bitcoin and other digital assets,” Joseph said.
ETF exits
Last week was the worst period of outflows from spot Bitcoin exchange-traded funds since March, to the tune of $620 million.
“Short-term outflows from spot Bitcoin ETFs also contributed to the negative sentiment in the market, negatively affecting the asset’s price action,” Joseph said.
“However, the upcoming launch of Ethereum ETFs, coupled with recent positive macroeconomic data, suggests that Bitcoin and major crypto assets will likely soon reverse their trend and aim for new cycle highs.”
Mount Gox
Once the world’s largest cryptocurrency exchange, Mt. Gox has dominated the industry since its collapse in 2014 after being hacked.
The reason? Around $9.2 billion worth of Bitcoin was stuck in bankruptcy, waiting to be repaid to creditors.
It now appears that those 142,000 Bitcoins could flood the market at any time before the October 31 Mount Gox redemption deadline.
The market could simply wait for these buybacks to take place.
“A massive Bitcoin buyback event is unlikely,” David Duong, head of research at crypto exchange Coinbase, said recently. DL News. “But concerns over these redemptions could further constrain liquidity, as market participants may avoid deploying new capital amid uncertainty.”
Miners sell their assets
Bitcoin miners are also putting pressure on the price of the largest cryptocurrency.
Although the halving has limited the amount of new Bitcoin that mining companies can create and sell, most of these operations still hold huge reserves of Bitcoin.
The area dropped about $300 million from its Bitcoin reserves since the start of the year, according to analytics firm CryptoQuant.
And Marathon Digital, the largest publicly traded U.S. mining company, gave up more than $92 million in June alone, or about 8% of its $1 billion reserve.
Eric Johannsson and Tom Carreras write about the markets for DL News. Do you have any advice on Bitcoin? Contact us at eric@dlnews.com or tcarreras@dlnews.com