Cardano’s ADA led losses among major cryptocurrencies on Thursday as bitcoin’s weakness showed no signs of stopping, halting any chance of an altcoin rally.
Bitcoin (BTC) fell to nearly $93,000 on Wednesday as new economic data sent US Treasury yields soaring, sending stocks tumbling. The Institute for Supply Management’s (ISM) latest report on US service providers was stronger than expected, with the measure of prices paid reaching its highest point since early 2023.
This sent other large companies into a downward spiral. Token prices have remained stable over the past week as traders took profits on a short-lived rally earlier in the week, with ADA, Solana’s SOL, BNB Chain (BNB), and ether (ETH) falling almost 10% from Monday.
The broader CoinDesk 20 (CD20), a liquid index that tracks the largest tokens, is down 2.87% in the past 24 hours, a further drop after Wednesday’s 7% drop.
Meanwhile, options on the broad S&P 500 now reflect greater downside risk than a year ago, which may further reduce the chances of a rally in risk assets including bitcoin as traders prefer investments. safer like bonds.
The defensive positioning on the stock is perhaps due to concerns that President-elect Donald Trump’s Jan. 20 inauguration could be a “selling the news” event, according to CoinDesk’s Omkar Godbole. Risk-taking has increased in financial markets over the past two months in anticipation of pro-corporate and pro-economic reforms under the incoming presidency of Donald Trump, and profit-taking cannot be ruled out.
Trump’s inauguration on January 20 is widely expected to change crypto regulations and even a strategic reserve of bitcoins in the coming months, both months providing foundations for the next rally.
It’s a view echoed by Singapore-based QCP Capital, which says traders should keep an eye on new US economic data on Friday before positioning further.
“All eyes are on this week’s FOMC and NFP releases, which are expected to further influence Bitcoin price trajectory,” QCP said in a Thursday market broadcast on Telegram. “With growing market anticipation, we believe Bitcoin’s pullback is simply a pause, setting the stage for a bullish rally as Trump’s inauguration fuels optimism.”
The NFP is a monthly report that provides information on job creation or loss in the U.S., excluding agricultural jobs, reflecting the health of the economy. The strong NFP numbers indicate a robust economy, suggesting potential interest rate increases, which tends to be bad for risk assets like bitcoin. The poor NFP numbers suggest that rates will remain low or decline, benefiting risk assets.
