Tech
Rotation out of tech stocks seen as a tailwind for cryptocurrencies
Baystreet.ca – Rotation out of tech stocks seen as a tailwind for cryptocurrencies
The ongoing rotation of investors out of technology stocks is seen as a driver for cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH).
Analysts note that cryptocurrency prices are rebounding after this spring’s big sell-off, even as stocks associated with artificial intelligence and big tech names are falling.
Bitcoin is currently trading around $65,000, while Ethereum is near $3,500, with both digital assets up nearly 10% over the past week.
At the same time, the tech-heavy Nasdaq index fell 4% as investors dumped tech stocks and converted capital into value and small-cap stocks.
According to market data, the Russell 2000 index, dedicated to small-cap companies, has risen more than 12% in the last week.
The sector’s rotation is being driven by signs of cooling inflation and growing confidence that the U.S. Federal Reserve will lower interest rates by the end of the year.
The sector rotation is proving to be a positive for cryptocurrencies, which had suffered a sharp decline in the second quarter of the year after hitting all-time highs in the first three months of 2024.
The coming days are likely to add another catalyst to the cryptocurrency space, as spot Ethereum exchange-traded funds (ETFs) are expected to begin trading around July 23.
The launch of spot Bitcoin ETFs in January this year sent the cryptocurrency market on a rally that reached an all-time high in mid-March.