Crypto exchange-traded funds continue to lose dollars as volatility in U.S. tech stocks grows.
Another day of sharp falls in the cryptocurrency market. Bitcoin drops 5.4% in the last 24 hours and is at $56,500, weighed down by the fall in Asian stock markets, US economic data and the Nvidia crash. Meanwhile, Ethereum fell 5.2% to $2,392.
Among the top 20 most traded cryptocurrencies, the declines are led by Toncoin (-11.6%), followed by Binance Coin (-6.2%), Near Protocol (-5.8%) and Polkadot (-5.4%).
Why cryptocurrencies are falling
Analysts point out that the declines observed in the equity marketson both sides of the world (the Nikkei plummeted by 4%), have a lot to do with the fear of a possible recession. “September has started badly, to put it mildly. US stocks have plunged after the latest ISM data showed the US manufacturing sector contracting for the fifth month, and now at an accelerating pace. This has rekindled fears of a recession ahead of crucial US employment data this week.“, noted Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
According to this expert, the slowdown in growth in the US and weak data are also raising rate cut expectations, favouring a sector rotation from large technology companies to other less valued segments in recent weeks. “But the expectation of an aggressive rate cut is negative for all stocks, regardless of their exposure to technology. Bad news is bad news for everyone,” he added.
How a US rate cut would impact the crypto market
In the case of cryptocurrencies, a cut should favor increases in the market, But for the moment it seems that fears of a possible recession outweigh a softer monetary policy. The publication of key economic indicators later this week, such as PMIs and unemployment data,could change market sentiment“If the US economy shows continued strength, investors may become more willing to take risks, which could push up the valuation of bitcoin, especially if interest rates begin to decline at a rapid pace,” said George Pavel, managing director of Capex.com in the Middle East.
Be that as it may, these fears seem to have been reflected in the performance of exchange-traded funds Spot BTC ETFs (ETFs) saw their worst day since May 1, recording net outflows of $287.8 million. Fidelity’s FBTC led the outflows, recording $162.3 million in withdrawals. Grayscale’s GBTC saw an outflow of $50.4 million, and BITB and ARK lost $25 million and $33.6 million, respectively. BlackRock’s IBIT fell to zero for the second day in a row. Meanwhile, ETH ETFs also saw their worst day since early August, with net outflows of $47.4 million.
Source: Ambito
