Bitcoin’s Early-week gains began to fade after U.S. markets opened on Thursday, with the cryptocurrency rising nearly 2% to $71,400 in the past 24 hours.
Meanwhile, oil prices rose 5.3% to $78.70 a barrel as stocks fell broadly as the war with Iran showed few signs of a quick end. The Dow Jones Industrial Average fell 1.4% and the S&P 500 fell 0.7%.
However, the Nasdaq fell only 0.4% as the previously hard-hit software industry ushered in major acquisitions. The iShares Expanded Tech-Software Sector ETF (IGV) leads the pack by 2%, having gained about 9% over the past five trading days.
The difference is noteworthy because Bitcoin has been closely tied to the software industry, with both declining in tandem since October on investor concerns about artificial intelligence disruption and both rebounding in tandem from their lows in recent days.
A new bull market or a bear market rally?
Maelstrom CIO Arthur Hayes said there is “no clarity yet” on Bitcoin, noting that the correlation with the IGV ETF remains despite the rally to $74,000. It remains to be seen whether Thursday’s decoupling will continue, but software names pushing higher while Bitcoin pulls back is not what cryptocurrency bulls want to see. “This could be a dead cat bounce,” Hayes continued.
Traders may also be selling some chips today ahead of Friday’s key U.S. February jobs report. Recent economic data has mostly been unexpectedly positive, reducing the likelihood that the Federal Reserve will resume cutting interest rates.
Rates traders at CME now see an 88% chance that the Fed will keep rates steady not only at this month’s meeting but also at its April meeting. A month ago, the probability was 59%.
Wintermute trader Bryan Tan said: “We are cautiously constructive, but geopolitical tail risks require modesty.” He said that improved inflows into spot Bitcoin exchange-traded funds (ETFs), which recorded nearly $2 billion in inflows in the past week alone, while trading volumes have also stabilized, are supporting the market, while a muted reaction to disruptions around the Strait of Hormuz could see Bitcoin climb to $74,000 to $75,000. The dollar’s range leaves room.
Bitfinex analysts said “spot market strength has increased significantly,” suggesting the recent gains were driven by market buyers rather than speculative leverage.
“We believe that if this trend continues, the situation may ease in the coming weeks and months,” they added.
