Apr 25 2024: Bitcoin experienced a decline on Thursday, influenced by subdued risk sentiment as a downturn in major U.S. technology stocks spilled over into the cryptocurrency markets. Additionally, anticipation surrounding interest rate indicators added further weight to Bitcoin’s performance.
The world’s largest cryptocurrency decreased by 3.8% in the past 24 hours, reaching $64,198.0 by 01:15 ET (05:15 GMT).
Correlation with Tech Stocks Resurfaces
Bitcoin’s downturn coincided with a drop in major U.S. technology stocks, triggered by a weaker-than-expected revenue forecast from Meta Platforms Inc, the owner of Facebook. Meta’s stock declined by 15% in after-hours trading, while Microsoft Corporation and Alphabet Inc saw drops of 2% and 3%, respectively.
Bitcoin typically mirrors the movement of U.S. technology stocks, as both sectors are viewed as opportunities for speculative investment with potential high returns.
Although this correlation had weakened earlier in the year, especially after the launch of spot exchange-traded funds in the U.S., recent weeks have seen Bitcoin’s correlation with tech stocks resurfacing. This shift occurred as enthusiasm around ETFs faded and both sectors faced renewed price pressures from expectations of prolonged higher U.S. interest rates.
Bitcoin has declined by approximately 8% over the past month, compared to a 4% drop in the tech-heavy Nasdaq 100 Futures index. The cryptocurrency has also maintained a trading range between $60,000 and $70,000 after reaching record highs in early March.
This increased correlation has brought attention to earnings reports from tech giants Microsoft and Alphabet, scheduled for later on Thursday.
Altcoins Weaken Amid Persistent Rate Jitters
In addition to Bitcoin’s decline, altcoins also experienced weakness as concerns over higher-for-longer U.S. interest rates persisted. The dollar remained below five-month highs, exerting downward pressure on most tokens.
Ethereum fell by 3.1% to $3,157.77, while Solana and XRP declined by 7.3% and 4.1%, respectively.
Market participants are eagerly awaiting more insights into the U.S. economy and interest rate expectations from upcoming data releases. Gross domestic product data is set to be released later on Thursday, providing insights into the first-quarter resilience of the U.S. economy. Of particular interest will be the PCE price index data due on Friday, which serves as the Federal Reserve’s preferred inflation metric and is likely to influence the central bank’s interest rate decisions.
