Market Pressure and Tech Sector Woes
The cryptocurrency market experienced slight improvement in price action on Thursday, but gains were minimal due to the DXY reaching its highest level since the collapse of several banks in March. This increase put pressure on financial markets, particularly risk assets. Stocks traded mixed, with the tech sector being weighed down by Apple (APPL) as its shares continued to fall amid reports of China forbidding government officials from using its iPhone. The ban is also expected to extend to state companies.
At the closing bell, the S&P ended down 0.32% and the Nasdaq down 0.89%, while the Dow gained 0.17%.
Bitcoin’s Narrow Trading Range
Bitcoin (BTC) remains pinned below $26,000, indicating a narrow trading range where bulls and bears are evenly matched in strength. This suggests that BTC price is unlikely to see a significant move without a notable catalyst.
Kitco senior technical analyst Jim Wyckoff states that bears currently have the firm near-term technical advantage. A price downtrend line on the daily chart suggests more sideways-to-lower price action in the near term.
Bitcoin’s Weakness and Potential Stock Market Drawdown
Mike McGlone, senior macro strategist at Bloomberg Intelligence, points out the weakness of Bitcoin in comparison to the Nasdaq. While Bitcoin dropped about 15% in the third quarter of the year, the Nasdaq gained 2% during the same period. McGlone suggests that Bitcoin’s weakness could be a precursor to a stock market drawdown or falling behind. Considering the significant growth of risk assets since the financial crisis and the factors that brought them to current levels, such as very low interest rates, he leans more towards the former.
McGlone notes that Bitcoin shows divergent weakness with its 260-day volatility being about 2x greater than that of the Nasdaq. He also mentions enduring Bitcoin momentum measures rolling over, which may require the crypto to prove strength.
According to McGlone, sustaining above the 100-week mean just over $30,000 would indicate recovery strength for Bitcoin. Otherwise, it is more likely that the cryptocurrency will continue its reversion process towards $10,000, which acted as a primary pivot from 2017 to 2020, until the significant liquidity pump.
Altcoin Market Performance
The altcoin market experienced a mixed day, with some tokens in the top 200 recording gains and others seeing price declines. Venus (VXS) was the standout performer with a 54.8% increase, followed by Core (CORE) with a 9% gain and Flux (FLUX) with an 8.42% increase. On the other hand, Worldcoin (WLD) was the biggest loser with an 8.5% decline, while Livepeer (LPT) fell 6.45% and Centrifuge lost 6%.
Overall Market Statistics
The overall cryptocurrency market cap currently stands at $1.04 trillion, with Bitcoin’s dominance rate at 48.3%.
