Cryptocurrencies experienced a sharp reversal of early gains during the US trading session today. Bitcoin (BTC), the largest digital asset, broke below $64,000 as the market sell-off put pressure on the digital asset market.
This decline coincided with selloffs in major U.S. stock indexes. The tech-heavy Nasdaq fell 2.9%, while the S&P 500 fell 1.39%. Technology mega stocks such as chipmaker Nvidia (NVDA), which played an important role in helping these two indexes reach all-time highs, have been struggling lately. Investors are directing their capital into smaller-cap stocks in anticipation of more positive interest rates later this year. Despite Wednesday's 6.5% drop, Nvidia remains up 145% year-to-date.
Joel Kruger, market strategist at LMAX Group, suggested that the crypto rally could stall if the stock market sell-off turns into a deeper correction. However, he also noted that over a longer time frame, cryptocurrencies could provide a haven for investors fleeing stocks.
“We have expressed concerns about the state of the US equity market and that we may soon see a major downtrend that will allow for a healthy correction,” Kruger said in a note today. “But even in such a situation, there are many who would want to buy Bitcoin as an escape to the safe asset.” “There will be plenty of reasons to want to buy other crypto assets on dips because of their great innovation potential,” he added.
*This is not investment advice.
