Cryptos are piling up. Expert warns that Bitcoin may go dormant.
Bitcoin
and other cryptocurrencies moved higher on Wednesday, bucking the trend in the stock market, but digital assets remain under pressure from regulatory developments that look unfriendly to crypto.
The price of Bitcoin has risen 1.5% in the past 24 hours to $22,150, still below the trading range around $23,000 that had previously dominated much of the past few weeks before a selloff last Thursday. The scrutiny of crypto companies by the Securities and Exchange Commission and other US regulators has picked up in the past week, hitting sentiment for digital assets.
“We continue to see resilience in crypto, which is very encouraging despite regulatory headlines not being particularly good,” said Craig Erlam, analyst at broker Oanda. “Bitcoin enjoyed a decent rally on Tuesday despite broader market sentiment being more challenging on the back of the US inflation report.”
In fact, Bitcoin remained resilient despite a falling stock market over the past 24 hours. The
Dow Jones Industrial Average
and
S&P 500
both fell after the latest inflation in the consumer price index, which upset expectations that the Federal Reserve will soon move to less aggressive monetary policy.
The Fed raised interest rates dramatically over the past year in an effort to curb inflation, providing major headwinds for stocks and cryptos – both risk-sensitive assets – and helping to strengthen the correlation between the two asset classes.
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The latest price action may indicate that Bitcoin’s link to stocks is weakening. But that’s not necessarily a good thing, especially as investor sentiment over cryptos continues to look depressed with signs of a slowdown following the 40% rally that started in 2023.
“Bitcoin is showing signs of re-entering a doldrums. Bitcoin volumes apart from Binance remain shallow and we note reduced institutional participation in the market as CME’s open interest has fallen another 11% this week,” wrote a team led by Bendik Schei at crypto research firm Arcane in a note.CME open interest refers to the number of Bitcoin futures contracts traded on the CME, which is a regulated US exchange that attracts mainly institutional investors.
Beyond Bitcoin,
Ether
-the second largest crypto-commodity up 2.5% to $1,550. Smaller cryptos or altcoins also rose, too
Cardano
gets 6% and
Polygon
jumps 5%. Memecoins also performed better, with
Dogecoin
rises 5% and
Shiba Inu
4% higher, helped after tweets from Elon Musk teased the group with jokes.
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Write to Jack Denton at [email protected]
