Major cryptocurrencies and U.S. stocks both fell on Thursday. Although the two asset classes often trade in tandem, analysts said their losses on Thursday could have been driven by different factors. Bitcoin fell 3.4% to about $63,053, its fourth consecutive day of decline. The largest cryptocurrency by market capitalization is still 15% away from its all-time high of $73,798 in March, according to Dow Jones Market Data, and has gained 50% this year.
Meanwhile, U.S. stocks staged a sharp reversal on Thursday, trading significantly lower in the afternoon, erasing earlier gains. The Dow Jones Industrial Average (DJIA) fell 494.82 points, or 1.21%, to close at 40,347.97 points. The S&P 500 fell 1.37% and the Nasdaq Composite fell 2.3%.
Mark Connors, Onramp’s global head of macro strategy, said that Bitcoin’s decline was mainly due to fears that the U.S. government might sell its seized Bitcoins, while risk aversion in the market also put pressure on cryptocurrencies.
On Monday, a wallet labeled as belonging to the U.S. government moved about 29,800 bitcoins worth about $1.9 billion at current prices, according to crypto intelligence firm Arkham Intelligence. The Bitcoins were transferred to an unmarked address and then to two different addresses. Analysts at Arkham wrote on the X platform that the bitcoins were likely sent to an institutional custody service.
Peter Eberle, chief investment officer at CastleFunds, said Bitcoin’s pullback also came after optimism peaked over Republican presidential candidate Trump’s speech at the Bitcoin 2024 conference. Over the weekend, Trump pledged to establish a strategic Bitcoin reserve in the United States during his keynote speech at the conference.
Trump's chances of victory have declined since Vice President Harris prepared to replace President Joe Biden on the Democratic ticket. Eberle said there's not much evidence that Harris' stance on cryptocurrencies differs significantly from the current administration, which many cryptocurrency supporters view as hostile to the industry, while Trump is now embracing the industry despite criticizing it in the past.
Connors said that in the months leading up to the November presidential election, Bitcoin’s price could move in tandem with Trump’s odds of winning the White House.
On the other hand, stocks fell on Thursday as investors fretted over the latest batch of weak data. Data released on Thursday showed that the Institute for Supply Management's (ISM) manufacturing index fell to 46.8% last month from 48.5% in June, marking the fourth consecutive month in contraction territory. Meanwhile, the number of Americans applying for unemployment benefits jumped to nearly a one-year high of 249,000 last week.
José Torres, senior economist at Interactive Brokers, said investors are now concerned that the Fed is not lowering its key interest rate quickly enough. The Federal Reserve kept interest rates unchanged on Wednesday, but Chairman Jerome Powell hinted that a rate cut may follow in September.