Stock and bond markets surged with an unexpected slowdown in inflation, but crypto didn’t join the rally, possibly because excitement waned over the imminent approval of a spot bitcoin ETF.
Crypto markets faced a tough day on Tuesday, experiencing one of their worst downturns in weeks, even though there was positive inflation data for October.
Bitcoin (BTC) took a dip to around $34,970 from its earlier position near $36,600 in the afternoon, following the release of October’s Consumer Price Index (CPI), which remained flat instead of slightly rising as expected. Currently, bitcoin is trading at $35,300, marking a 3.7% decrease in the past 24 hours.
Ether (ETH) dropped nearly 6% during the same period, falling below the $2,000 level it had recently reclaimed last week. This decline occurred following BlackRock’s filing for a spot ETH exchange-traded fund (ETF), marking the first time since July that ETH lost this level.
Popular altcoins like Dogecoin (DOGE), Polygon (MATIC), and Tron’s native token (TRX) experienced declines of 6% to 7% throughout the day.
Has the Rally in Bitcoin Prices Come to an End?
In traditional markets, there’s a prevailing belief that the Federal Reserve is done raising interest rates and might even lower them in the first half of 2024. By late Tuesday, the Nasdaq had risen by 2.3%, surpassing a 10% gain for November, while the S&P 500 was up by 1.8%.
In the bond markets, there was significant movement, with the 10-year Treasury yield dropping by 20 basis points to 4.44%. Just three weeks ago, there was a nervous surge that pushed the yield above 5% for the first time in over 16 years. The dollar also mirrored this trend, as the DXY Index fell by a substantial 1.55%.
Despite a challenging day for crypto, a Tuesday report from investment management firm Grayscale suggested that slower inflation and reduced bond yields could provide support for cryptocurrency prices.
The report suggests that the improvement in cryptocurrency values could keep going if real interest rates stop rising, and if there’s progress in approving spot ETFs in the US market. Currently, there’s a lot of focus on ETF speculation. However, the idea that cryptocurrency is a store of value remains strong, providing a solid and growing foundation for the asset.
This Friday is the deadline for the U.S. Securities and Exchange Commission (SEC) to decide on whether to approve, deny, or delay Hashdex’s and Franklin Templeton’s requests for a spot bitcoin ETF. Even though there’s a lot of excitement about possible approvals, many people anticipate that there might be more delays announced this week.
Okay, we're nearing in on deadline dates for 3 spot #Bitcoin ETF applications. I want to get ahead of it because there's a pretty good chance we'll see delay orders from the SEC. Delays WOULD NOT change anything about our views & 90% odds for 19b-4 approval by Jan 10, 2024 pic.twitter.com/LE7sOlHAHM
— James Seyffart (@JSeyff) November 14, 2023
According to a report from K33 Research on Tuesday, if the situation unfolds this way, the momentum in the crypto markets could slow down. This is because we might have to wait for several weeks to hear any important news about the ETFs.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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