As an analyst with a background in traditional finance and digital assets, I’ve been closely monitoring the performance of both the US stock market and cryptocurrencies throughout the year. While the US stock market has experienced unprecedented growth, reaching new all-time highs, the situation for major cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) could not be more different.
The world of cryptocurrencies is frequently characterized as an investment category that typically fails to keep pace during periods of economic instability.
In recent weeks, the stock market has seen significant gains, reaching new record highs for many major indexes. Conversely, cryptocurrencies have experienced a downturn since March, with the largest digital assets suffering substantial losses.
US Stock Market on a Roll
Due to the significant buzz surrounding Nvidia, the US stock market has experienced a remarkable surge since the beginning of the year. To illustrate this using the most prominent and largest index, the S&P 500, as an example: At the start of 2024, it was below 4,800. However, it reached approximately 5,500 earlier this week, setting a new record high.
As a crypto investor, I’ve been thrilled to witness the Nasdaq Composite’s remarkable surge in 2023. It has gained an impressive 19.8% since the beginning of the year and hit an all-time high of almost 18,000 this week.
As a crypto investor, I’ve noticed that the Dow Jones Industrial Average (DJIA) has underperformed compared to the tech sector, particularly companies like Nvidia that have driven significant gains in the market. Despite this underperformance, the DJIA has still managed to reach new all-time highs this year, with a gain of around 4% year-to-date. However, it’s important to remember that these two markets don’t necessarily move in lockstep and investing in multiple sectors can help diversify risk.
In recent weeks, the behavior of cryptocurrencies like Bitcoin and Ethereum has diverged noticeably from one another.
Although the stock market is hitting record highs, Bitcoin and Ether have experienced a drop of more than 10% since reaching their peak values this year.
Significant declines of over 25% from their peaks have been experienced by other notable cryptocurrencies, including Solana ($SOL), Cardano ($ADA), and Chainlink ($LINK).
— IntoTheBlock (@intotheblock) June 21, 2024
What About BTC/ETH?
As a crypto investor, I’ve seen Bitcoin’s 2021 be quite bullish with the approval of spot Bitcoin ETFs in the United States back in January. This development was a significant milestone for the crypto market and often serves as a catalyst for bull runs. However, despite the highly anticipated fourth halving event earlier this year, which historically sparks price increases, Bitcoin hasn’t performed as well as expected since then.
As an analyst, I’ve observed that Ethereum (ETH) received a favorable decision from the US Securities and Exchange Commission (SEC) in the form of approval for spot Ethereum exchange-traded funds (ETFs) last month. Nevertheless, despite this positive regulatory development, ETH’s price has largely given up the price increase that followed the announcement.
In recent weeks, BTC and ETH have dropped approximately 10% from their peak values this year. Notably, their declines have occurred independently of US stock markets. Despite these losses, it’s important to note that both cryptocurrencies still display positive gains compared to the mentioned indexes.
BTC is up by 50% since the start of 2024, while ETH has gained 54% within the same timeframe.
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2024-06-24 02:31