Bitcoin The rally from earlier in the week began to fade after U.S. markets opened on Thursday, sending the cryptocurrency up nearly 2% in the past 24 hours to $71,400.
The move comes alongside a decline in overall stock markets as the war in Iran shows no signs of ending quickly, sending oil up 5.3% to $78.70 per 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 sees heavy bidding. The iShares Expanded Tech-Software Sector ETF (IGV) is ahead 2% and now up about 9% over the past five sessions.
This divergence is notable because bitcoin is closely tied to the software sector, with both falling in concert since October on investor concerns about AI disruption and each rebounding from their lowest levels in recent days.
New bull or bear market rebound?
Bitcoin “isn’t clear yet,” said Maelstrom CIO Arthur Hayes, noting that despite the rally to $74,000, the correlation with the IGV ETF remained. Whether Thursday’s decoupling lasts remains to be seen, but software names rising while bitcoin retreats isn’t what crypto bulls wanted to see. “It could be a dead cat bounce,” Hayes continued.
Today, traders could also pull out some chips ahead of the key US jobs report for February, released on Friday. Recent economic data has mostly surprised to the upside, lowering the odds for a resumption of Federal Reserve rate cuts.
Interest rate traders at the Chicago Mercantile Exchange now see an 88% chance that the Fed 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 extreme geopolitical risk requires humility,” said Bryan Tan, a trader at Wintermute. He said improving flows into spot Bitcoin exchange-traded funds (ETFs), which saw nearly $2 billion in inflows in the last week alone, as well as stabilizing trading volumes, are supporting the market, while a muted response to disruptions around the Strait of Hormuz could leave room for bitcoin to climb towards the $74,000-$75,000 range.
Bitfinex analysts said there had been a “notable increase in spot market strength,” indicating that the recent rise was due to market buyers rather than speculative leverage.
“We consider that there is a possibility of relief in the coming weeks and months if this trend continues,” they added.
