Bloomberg ETF analyst James Seyffart and macro trader Alex Krüger discussed the decoupling of cryptocurrency markets from tech stocks in recent weeks.
What Happened: While the Nasdaq continues to rally, led by AI darling Nvidia NVDA, Bitcoin BTC/USD and Ethereum ETH/USD have remained range-bound since March. The decoupling of crypto from tech stocks could signal a maturing market, with digital assets potentially offering diversification benefits, according to the expert.
"It's actually a good thing that we're not seeing Bitcoin and Ethereum correlated with the Nasdaq," noted James Seyffart in a podcast with crypto journalist Laura Shin. "You want them to be uncorrelated assets with different risk-reward payoffs."
Expectations for Fed rate cuts in September have risen to 69%, and long-term Treasury yields are also rising, with 30-year futures down 1.6% in a single day. Meanwhile, VanEck and 21Shares filed for Solana SOL/USD ETFs, following Bitcoin and Ethereum. However, approval remains unlikely before 2025 without regulatory changes.
Also Read: Bitcoin, Ethereum ETF Inflows ‘Will Change The Mood Completely,’ Says Trader: ‘Up Often, Up Only’
Why It Matters: Rising rate cut expectations could be bullish for crypto, as lower rates typically boost risk assets. However, the "bear steepening" of the yield curve, attributed to the "Trump trade," suggests markets are pricing in potential fiscal irresponsibility if Trump wins in 2024.
Meanwhile, the upcoming U.S. election looms large, with Trump’s debate performance boosting his odds. A Trump victory could be positive for crypto, however, there’s still significant time before November.
As macro crosscurrents swirl, crypto markets’ consolidation may be setting up for a future breakout. "I'm pretty disappointed by price action," admitted Alex Krüger. "But I don’t see any reason to have my bullish views invalidated."
Ultimately, the stage may be set for crypto’s next move, though the direction remains unclear. Investors will be closely watching economic data, particularly the upcoming non-farm payrolls report, for clues on the Fed’s next moves and potential impacts on crypto markets.
What’s Next: The influence of Bitcoin as an institutional asset class is expected to be thoroughly explored at Benzinga’s upcoming Future of Digital Assets event on Nov. 19.
This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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