Photo by Bitcoin’s slide has caught many crypto bulls off guard, with the cryptocurrency struggling to break out of its downtrend despite a series of record highs in the S&P 500 and Nasdaq. On Thursday, both asset classes tumbled together, with the Nasdaq Composite and S&P 500 closing in the red and bitcoin falling by 0.6% to $57,500.
“Right now, the biggest risk we see to crypto assets is the risk that highly overbought U.S. equities could be on the verge of rolling over,” said Joel Kruger, market strategist at LMAX Group.
Bitcoin price volatility
While bitcoin has struggled to keep pace with the Nasdaq, its correlation with the index has fallen to multi-month lows. According to a recent report in The Block, bitcoin’s correlations with the Nasdaq and S&P 500 have dropped to minus 0.84 and minus 0.82, respectively.
Nasdaq Composite Index
However, despite the downturn, there are signs of life in the crypto market. The amount of ether staked is nearing a record high, with 33.3 million ETH or 27.7% of the total supply locked up, according to CryptoQuant’s head of research, Julio Moreno.
Total ether supply
Meanwhile, the prospect of a spot ether ETF in the U.S. is becoming increasingly likely, which could lead to increased investment in the cryptocurrency. Bitcoin, on the other hand, is still struggling to break above $59,000, a level it briefly reached earlier this week.
Bitcoin price chart
In other news, the German government has been selling its seized bitcoin holdings, with the stash dropping below $1 billion in value for the first time. Meanwhile, U.S. spot bitcoin ETFs have enjoyed strong inflows, with $511.2 million pouring into these funds on Monday and Tuesday alone.
Bitcoin ETF inflows
The regulatory environment for crypto is also heating up, with Congress set to vote on a bill that would overturn President Biden’s veto of a measure that would make it easier for traditional banks to offer crypto custodial services.
U.S. Congress
The meeting comes as the crypto industry is increasingly looking to Congress for regulatory clarity. Democrats, in particular, have been slow to recognize crypto supporters as a potential voting bloc, while Republicans have been more open to engaging with the industry.
Democratic leaders
Overall, the crypto market is facing a period of uncertainty, with bitcoin struggling to break out of its downtrend and regulatory uncertainty hanging over the industry. However, with increasing investment in ether and a growing recognition of crypto’s potential, there are signs that the market is poised for a rebound.
