Why Bitcoin (BTC) Is Declining While Nasdaq and US Stock Markets Set New Records
As US stock markets continuously break records, Bitcoin, typically correlated with these markets, is facing a decline. Here are five potential reasons for this contrasting trend.
The Nasdaq Composite Index has marked its seventh consecutive record-breaking day. Meanwhile, boosted by heightened investor interest in Nvidia and artificial intelligence, the Dow Jones Industrial Average and S&P 500 are also on the rise. However, Bitcoin, the leading cryptocurrency globally, continues its descent.
Analysts identify several factors potentially impeding Bitcoin’s price:
1. Bitcoin Takes a Breather
After a robust start to the year, Bitcoin seems to be pausing, suggests Adam Morgan McCarthy from Kaiko Research, a crypto data and analytics firm. While the Nasdaq has surged by 18% this year, Bitcoin has outpaced it with a 53% rise. McCarthy emphasizes that Bitcoin’s movements are influenced by distinct catalysts.
“Bitcoin has experienced a strong start to the year, especially due to regulatory advancements in the US,” noted McCarthy. He added, “The upcoming drivers for Bitcoin will hinge on the lasting impacts of the recent halving and the demand for ETFs.”
2. Impact of BTC Halving
The fourth Bitcoin halving, occurring in mid-April, reduced the rewards miners receive for maintaining the blockchain. Although typically expected to drive prices up by limiting supply, the effects of halving usually take time to materialize, particularly evident during heightened BTC demand.
“ETF Demand in the US could significantly impact this in the coming months as more advisors and firms onboard new investors,” McCarthy highlighted.
3. ETF Outflows
Recent statistics show substantial outflows from spot Bitcoin exchange-traded funds (ETFs), totaling $620 million last week—the largest since March. These short-term outflows have contributed to a pessimistic market sentiment, influencing Bitcoin’s price negatively.
However, the impending launch of Ethereum ETFs and positive macroeconomic indicators suggest potential reversals in BTC and other major cryptocurrencies, targeting new highs soon.
4. Mt. Gox Payments
Once the largest crypto exchange globally, Mt. Gox’s collapse in 2014 following a hacking incident has cast a lingering shadow over the industry. Approximately $9.2 billion worth of Bitcoin remains entangled in bankruptcy, awaiting distribution to creditors by October 31. David Duong, research manager at Coinbase, expressed doubts regarding a mass Bitcoin redemption event but highlighted concerns about its potential impact on market liquidity.
5. BTC Miners
Pressure from Bitcoin miners, who are increasingly liquidating their holdings, may also contribute to the current stagnation in BTC prices due to heightened supply.
Disclaimer: This article does not provide investment advice.
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