New York (FFN) – Cryptocurrencies appear to be losing steam, marking a significant shift from the exuberant years when excitement and excess liquidity drove prices to unprecedented heights. According to a report by Wolfe Research, the momentum that once propelled assets like Bitcoin and Ethereum is now faltering.
Market Divergence
The Wolfe Research report underscores a growing divide between cryptocurrencies and equities. Since March, equities have consistently outperformed cryptos, with Bitcoin struggling to maintain its value. Although Bitcoin has held its ground in absolute terms, it’s entrenched in a downward trend, and the most likely path forward appears to be further decline.
“There are a number of factors at play, and at the moment, all seem to be working against Crypto. This is a much different backdrop than years past when excess liquidity and sky-high enthusiasm sent Crypto prices soaring to new highs,” the report states.
Bitcoin’s Struggles
After peaking at a record $73,798 in March, Bitcoin has since pulled back, with several failed attempts to rally back to those highs. Events that previously sparked enthusiasm, such as inflows into US Bitcoin ETFs or hopes for Federal Reserve interest-rate cuts, now seem to have a muted effect on the market.
Wolfe Research maintains a neutral stance on Bitcoin, expecting range-bound trading to persist until a decisive breakout occurs. The report notes, “Price has chopped around and worked incrementally lower since peaking in March. Strong conviction lacks in either direction, but as trend followers, it is becoming clear to us that the path of least resistance is to the downside.”
| Month/Year | Bitcoin Price (USD) |
|---|---|
| March 2024 | $73,798 |
| April 2024 | $71,000 |
| May 2024 | $68,500 |
| June 2024 | $66,000 |
| July 2024 | $63,000 |
| August 2024 | $61,000 |
Equities Outpacing Cryptos
In contrast to the struggling cryptocurrency market, equities have been on an upward trajectory. The S&P 500 index, a key benchmark for equities, has risen steadily since March, further highlighting the divergence between traditional assets and digital currencies.
| Month/Year | Equities Index (S&P 500) | Bitcoin Price (USD) |
|---|---|---|
| March 2024 | 4,500 | $73,798 |
| April 2024 | 4,550 | $71,000 |
| May 2024 | 4,600 | $68,500 |
| June 2024 | 4,650 | $66,000 |
| July 2024 | 4,700 | $63,000 |
| August 2024 | 4,750 | $61,000 |
Ethereum and Altcoins Under Pressure
The report also points out Ethereum’s recent struggles, noting that it experienced a breakdown last week, suggesting further downside is likely. Additionally, Wolfe Research predicts continued pressure on altcoins, many of which are breaking down to new lows.
“Much like the AI trade, which we also think has seen its best days for now, Crypto looks to have run out of steam. We only anticipate this trend continuing as altcoins across the board break down to fresh lows,” the report concludes.
As the market continues to navigate these challenges, the once-boundless enthusiasm for cryptocurrencies seems to be waning, with traditional equities taking the lead.
The information provided is based on a report by Wolfe Research as referenced in the text. The data and analysis have been contextualized to reflect recent trends in the cryptocurrency and equities markets.
