Digital currencies are hit by the tech stock decline, while ether experiences a 6% drop.

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Ether Experiences a 6% Decline as Digital Currencies Feel the Impact of Tech Stock Decrease

Following a downturn in technology stocks that led to the S&P 500 and Nasdaq Composite experiencing their worst day since 2022, cryptocurrencies also took a hit.

Bitcoin faced a 2% drop, settling at $64,603.34 on Thursday, as reported by Coin Metrics. Disappointing quarterly earnings from Alphabet and Tesla contributed to the tech sector’s decline, prompting investors to move away from high-risk assets like cryptocurrencies.

“The recent setbacks seem to be driven more by larger macroeconomic forces affecting global financial markets,” said Joel Kruger, a market strategist at LMAX Group. “Concerns about the global economy’s outlook have intensified due to softer economic data, disappointing US earnings, and central bank actions. As a result, most major assets, including currencies, commodities, and stocks, have succumbed to traditional safe havens.”

Kruger also highlighted ongoing selling pressure on bitcoin due to the Mt. Gox repayment schedule, adding to the cryptocurrency market’s challenges.

Meanwhile, ether saw a significant 6% decline, dropping to $3,172.59, as newly launched ether exchange-traded funds continued trading for the third consecutive day. The Grayscale Ethereum Trust (ETHE), which transitioned into an ETF, experienced $484 million in outflows in the previous session.

“The situation mirrors the launch of spot bitcoin ETFs back in January,” explained Yuya Hasegawa, a crypto market analyst at Bitbank. “Grayscale’s Ethereum trust had been trading at a discount for a while, so traders might have purchased trust shares to sell spot ETH for arbitrage – a pattern similar to the bitcoin ETF launch.”

Crypto Market Faces Pressure Amid Tech Stock Turmoil

Bitcoin faced a decline for several weeks following the introduction of bitcoin ETFs earlier this year. However, the current launch of ether ETFs is set against a different market backdrop, offering investors potentially positive developments that could bolster prices, according to Hasegawa.

The day also marked the commencement of the Bitcoin 2024 conference, generating anticipation for speeches from pro-bitcoin US politicians across party lines, including former President Donald Trump. Moreover, expectations for a Federal Reserve rate reduction in September are gaining traction.

As cryptocurrencies trended lower, stocks tied to the crypto market experienced pullbacks. Coinbase saw a 1% decrease, while MicroStrategy dipped by 3%. Leading bitcoin miners, Marathon Digital and Riot Platforms, witnessed drops of 2% and 4%, respectively.

Kruger viewed the recent crypto setbacks as “minor hurdles within a robust upward trend,” pointing out that bitcoin and ether have surged by 51% and 38% year-to-date, outperforming the S&P 500’s 14% growth over the same period.