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Crypto prices have risen over the past week.
Dreamstime
Bitcoin
and other digital assets were higher on Friday, but stock market action was set to shake up sentiment for risk-sensitive assets, threatening to wipe out the recent crypto rally.
The price of
Bitcoin
has gained 2% in the last 24 hours to $23,200. The largest digital asset went as far as $24,200 at the height of a rally this week that has taken the token almost 15% higher and brought the market cap of the crypto space back above $1 trillion. Bitcoin is now well above its recent bottom below $18,000, which it hit at the depth of a dramatic selloff in mid-June.
Digital assets remain in the dumps after a price crash and amid fears of another “crypto winter,” with Bitcoin trading at around a third of its all-time high from November 2021. But a return for an appetite for cryptos in the recent has increased the prospect that the bottom has been reached and that prices can continue to rise again. The market cap for crypto was almost $3 trillion less than nine months ago, so it’s a long way back.
“Bitcoin traders must have started to feel that the dark days were potentially behind them. No new negative headlines, resilient price action and good results in challenging markets,” Craig Erlam, an analyst at broker Oanda, wrote in a note.
But earnings from technology companies threaten to derail the digital asset rally. Cryptos should in theory trade independently of the regular financial markets, but have been shown to be highly correlated with stocks, and especially technology stocks, following fluctuations in
S&P 500
and
Nasdaq
indexes. While the tech-heavy Nasdaq climbed 1.4% on Thursday, futures that track the index signaled losses ahead as the week draws to a close.
The company’s earnings late Thursday from social media are partly to blame
Snap
(ticker: SNAP), which reported slowing sales and said it would not provide forecasts for its performance in the current quarter. This has raised the hackles of investors already fearful of an economic slowdown as the Federal Reserve fights inflation with more aggressive monetary policy, including much higher interest rates.
“Markets will severely punish richly valued technology stocks at the first sign of trouble, and there is now some risk to the broader equity markets from [rest of Big Tech] yet to report,” Jeffrey Halley, an analyst at broker Oanda, wrote in a note. “Inflation remains and will remain stubbornly high, geopolitical risk abounds, growth is slowing around the world, and recession risk is rising. I don’t see how that’s a productive environment for stocks.”
Big Tech earnings have the ability to pull the Nasdaq around, as well as the broader stock market, so any significant changes in investor sentiment from big tech company results are likely to bleed into the crypto space.
Twitter
(TWTR) earnings are due Friday, before
apple
(AAPL),
Alphabet
(GOOGL),
Amazon.com
(AMZN), and
Microsoft
(MSFT) reports results next week.
Other cryptos beyond Bitcoin were even stronger.
Ether
rose 8% to $1,600 as the token underpinning the Ethereum blockchain network continued to outperform its larger peers. Smaller tokens, or altcoins, were somewhat more muted, too
Solana
up 5% and
Cardano
2% higher. Memecoins showed much of the same, with
Dogecoin
and
Shiba Inu
climbing of 3% and 4% respectively.
Write to Jack Denton at [email protected]
