Bitcoin The rally from earlier in the week began to fade after US markets opened on Thursday, sending the cryptocurrency up nearly 2% over the past 24 hours to $71,400.
The move comes alongside declines in broader stock markets as the Iran war shows little sign of coming to a quick conclusion, sending oil up 5.3% to $78.70 a barrel. The Dow Jones Industrial Average is down 1.4% and the S&P 500 is down 0.7%.
The Nasdaq, however, is down just 0.4% as the previously battered software sector captures significant supply. The iShares Expanded Software and Technology Sector ETF (IGV) is ahead 2% and is now up about 9% over the last five sessions.
That divergence is notable, as bitcoin has been closely tied to the software sector, both falling simultaneously since October amid investor concerns about AI disruption and each bouncing off their lows in recent days.
New rebound in the bull or bear market?
Bitcoin is “still unclear,” said Maelstrom CIO Arthur Hayes, noting that despite the rally to $74,000, the correlation with the IGV ETF remained. It remains to be seen whether Thursday’s decoupling will last, but software names rising as bitcoin retreats is not what cryptocurrency bulls wanted to see. “It could be the rebound of a dead cat,” Hayes continued.
Traders today could also be taking some chips off the table ahead of the key February US jobs report due out on Friday. The latest economic data has surprised mostly to the upside, reducing the odds that the Federal Reserve will restart rate cuts.
Interest rate traders on the Chicago Mercantile Exchange now see an 88% chance that the Federal Reserve will keep rates steady not only at this month’s meeting but also in April. A month ago, those odds were 59%.
“We are cautiously constructive, but geopolitical risk demands humility,” said Wintermute trader Bryan Tan. He said improving flows into spot bitcoin exchange-traded funds (ETFs), which have seen nearly $2 billion in inflows in the past week alone, along with stabilizing trading volumes, are supporting the market, while a muted reaction to the disruptions around the Strait of Hormuz could leave room for bitcoin to rise towards the $74,000-$75,000 range.
Bitfinex analysts said there has been a “notable increase in spot market strength,” indicating that the recent bullish move was driven by market buyers rather than speculative leverage.
“We consider there is a possibility of relief in the coming weeks and months if this trend continues,” they added.
